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Shashi Ashiwal

Woes galore: Mr Ganesh Kumar Gupta (right), President, Federation of Indian Export Organisations, and Mr. Ajay Sahai, Director General, addressing a press meet in Mumbai on Thursday. —

Our Bureau

Mumbai, Nov. 6

Hit by the slowing demand in several overseas markets such as the US, Europe and Japan, Indian exporters are facing a double whammy of sorts with problems including higher premium for insurance cover and liquidity crunch.

The Export Credit Guarantee Corporation and insurance companies have hiked premium rates by 25 to 30 per cent on insurance cover for exporters, said Mr G.K. Gupta, President, Federation of Indian Export Organisations (FIEO), at a press conference here.

He said insurance companies have also reduced the extent of liability coverage by 25 to 30 per cent.

“The pre-shipment covers have been reduced by private players such as Bajaj Alliance, IFFCO Tokyo, ICICI Lombard and New India Assurance. As a result, public sector banks are also diffident to provide pre- and post-shipment finance,” Mr Gupta said.

Indian banks have stopped accepting payment guarantees for exporters against lines of credit of foreign banks due to fear of such credit collapsing due to the fall of several banks and financial institutions abroad, he said.

Mr Gupta demanded that the post-shipment credit which is currently available only up to 90 days should be provided for a tenure of 270-365 days, keeping in view the financial crunch faced by overseas buyers demanding longer credit period.

“Despite the depreciation of rupee against the dollar exports have not picked up. The trade deficit grew to record level of $ 60 billion for the first six months of the financial year,” said Mr Ajay Sahai, Director General, FIEO.

The US, Europe and Japan markets which together contribute 40 per cent of exports, have entered into recession, posing threat to the future overseas trade, he said.

The job-oriented export sector has shown up to 70 per cent negative growth and there is a sharp decline in tea, handicrafts, carpets, oil meals, man-made yarn, cotton yarn and marine products, said an FIEO release.

More Stories on : Exports & Imports | Financial Markets | General Insurance

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