Economy

Exporters want banks to waive penalties on delayed payments due to coronavirus disruption

Amiti Sen New Delhi | Updated on March 20, 2020 Published on March 20, 2020

Also make a case for post-shipment credit to tide over difficult times

Exporters have asked the government to ensure that banks do not penalise them on overdue bills as many buyers in countries hit by coronavirus, such as the US, France, Germany and China, are delaying their payments for shipments.

“Several export sectors have reported to the Commerce Ministry that payments for their shipments are getting delayed and banks should be asked to be sensitive and not impose penalties. The Commerce Ministry is communicating the message to various banks,” a government official told BusinessLine.

Exporters’ body Federation of Indian Export Organisations (FIEO) has also made a case for conversion of pre-shipment credit to post-shipment credit.

“Our buyers in many countries across Europe, the US and other places do not have making payments for their imported consignments as their priority. Many are so busy dealing with the impact of coronavirus that they do not even have time to respond to Indian exporters’ queries for payments,” said Ajay Sahai from FIEO, adding that exporters are in need of post-shipment credit because of stuck payments.

FIEO has taken up the matter with both the Commerce Ministry and the Finance Ministry and is hopeful of a positive outcome, Sahai said.

The Confederation of Indian Textile Industries (CITI), too, has sought moratorium on repayment of principal and interest to banks for four quarters from April 1, 2020 to March 31, 2021. It has sought a relief package, including reduction in interest rates, for the textile and apparel sector to tide over the crisis being faced by the highly capital- and labour-intensive textile industry which operates on “wafer-thin margins”.

Research body CRISIL has said that sectors such as gem and jewellery and textiles are likely to face headwinds in exports given the recessionary trends in the key global markets, including the US and Europe.

Export credit had contracted by about 23 per cent in 2019 (January-December) even before the outbreak of the coronavirus worldwide and now the situation has worsened, according to Ravi Sehgal from the Engineering Export Promotion Council (EEPC).

He said exporters need immediate fiscal relief and credit flow to keep their work force and essential plant and machinery operational.

India’s exports during April-February 2019-20 was 1.5 per cent lower than in the same period last year at $292.91 billion.

Although exports of goods in February 2020 posted a small increase of 2.91 per cent (year-on-year) to $27.65 billion, outbound shipments from major sectors, including gem & jewellery, readymade garments, leather and most agricultural produce, including meat and rice, posted declines during the month.

Published on March 20, 2020
coronavirus
export and import
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