The Hindu Business Line : EEPC flays proposal to hike export credit rate

THE Engineering Export Promotion Council (EEPC) has criticised the suggested hike (by the RBI committee) in export credit rate in foreign currency by 25 basis points to Libor plus one per cent as a counter-productive measure, especially in the international context when the prevailing rates are Libor plus 0.5 per cent.

Talking to Business Line here today, Mr Rakesh Shah, National Chairman, EEPC, said Libor plus 0.75 per cent was good enough and any further hike would disturb exports, particularly of capital goods at this juncture when "we are faced with a trade deficit situation".

He felt the hike in rate, if effected, may not be in line with the thinking of the Commerce Ministry which has now revised the annual export target to $92 billion.

Mr Shah said the issue was likely to be taken up at the first meeting of the reconstituted Board of Trade under the chairmanship of Mr Kumar Mangalam Birla on Friday. It may figure under the broad agenda of "export growth overview and challenges".

He said the inaugural session would be chaired by the Union Commerce Minister, Mr Kamal Nath. Among the main subjects to be discussed at the day-long meeting of the 38-member BoT are proposed amendments to the Foreign Trade (Development and Regulation) Act, 1992 (FTDR), DEPB successor scheme, trade facilitation issues, new products-new focus areas and product/country/region matrix and RTAs/PTAs.

He said BoT would also hold discussions on the Transaction Cost Committee report. Asked on the FTDR, he said amendments are being proposed to bring in services exports within the purview of the Act.

Among the terms of reference of the new BoT, constituted on April 1 and expected to meet at least once every quarter, are review of export performance of various sectors, identify constraints and suggest industry-specific measures to optimise export earnings, examine the existing institutional framework for export and import and suggest steps for further streamlining to achieve the desired objectives, and to advise the Government on policy measures for preparation of both short- and long-term plans for increasing exports in the emerging national and international economic scenario.

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