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G. Srinivasan

New Delhi, Nov. 1 The meltdown of the world financial market and its aftermath of incipient recession across the globe have together impacted on India’s exports tangibly with the latest monthly figure of exports for September to be released on Monday likely to show a pronounced deceleration, after clocking a heady 35 per cent growth during the first five months of the current fiscal.

In an interview to Business Line here, the Commerce Secretary, Mr Gopal K. Pillai, said the Commerce Ministry is ‘worried’ over the slowing down of the export juggernaut.

He said if the estimated export growth of 10 per cent for September is to persist for the second half of the current fiscal, the overall export growth would be less than 20 per cent.

He said the situation called for some relief measures being put in place to make export a viable and exchange-earning proposition.

He said when the export growth during the first five months of the current fiscal hovered around 35 per cent, the target of $200 billion for the whole fiscal from the previous year of $162 billion appeared feasible.

Now, with export growth having slowed down to 10 per cent in September, “we should at least maintain a 20 per cent growth for the whole of the current fiscal so as to compass an export turnover of $192 billion”.

He said 20 per cent growth over what was achieved last fiscal was the ‘bottom-line’. Textiles, including readymade garments and marine products, had done badly so far, exacerbated by the generalised slowdown of the global economy, he added.

Asked if any relief measures to cushion the adverse effect on exporters are under consideration, Mr Pillai said “since basically the problem exporters face primarily relate to non-payment or delayed payment, we have to find some mechanisms”.

While the banking system gives 90-day credit, the other party is not able to settle export dues and on the 91st day “this becomes an outstanding balance and affects exporters’ working capital”, Mr Pillai said, adding that in the wake of the global crisis, “we have to find a way for the exporters and in the case of 90 days, giving credit for 180 days or 260 days could be considered by way of relief to exporters”.

Another set of relief is insurance cover to exporters when there is a possibility of default or delayed payment from the buyers’ side.

He said where the exporters have a firm order and are bona fide exporters, government guarantee could be extended because the insurer is also worried that he might be saddled with bad claims.

Mr Pillai said if such type of assistance is not extended to exporters now, they might start selling in the domestic market.

He also made out a case for reduction in interest cost to exporters for which “there is a lot of pressure and now that inflation is slowly coming down.”

Alongside, dollar credit to exporters could also be made available, he said, particularly when the exporters had taken an external commercial borrowing (ECB) but has equivalent Indian rupee but not dollars to pay out his outstanding because dollars are not available in the market or in the system.

To a specific query as to the distinct possibility of flooding of Chinese manufacturing goods in the Indian markets, adding to the woes of manufacturer-exporters, Mr Pillai said: “We are concerned that if China does not reduce production and its major market — US — is affected, where is it going to sell its products? We have to be watchful and see that if it happens, we should be prepared to take whatever action is required to safeguard the domestic industry. We are only worried about a surge in imports such as auto components and steel items.”

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