With India’s exports and imports getting impacted by the pandemic, the Reserve Bank of India (RBI) has decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing 12 months to 15 months.

The central bank has also extended the time period for completion of outward remittances against normal imports (excluding import of gold/diamonds and precious stones/jewellery) into India from six months to 12 months from the date of shipment.

The increase in the maximum permissible period of pre-shipment and post-shipment export credit is for disbursements made up to July 31, 2020. This is expected to alleviate difficulties being faced by exporters in their production and realisation cycles.

The extension of the time period for completion of outward remittances against normal imports into India from six months to 12 months is from the date of shipment for such imports made on or before July 31, 2020. This is expected to provide greater flexibility to importers in managing their operating cycles in a Covid-19 environment.

Worst slump in 30 years

According to RBI Governor Shaktikanta Das, in the external sector, India’s merchandise exports and imports suffered their worst slump in the last 30 years as Covid-19 paralysed world production and demand. Merchandise exports plunged 60.3 per cent in April 2020 while imports contracted 58.6 per cent.

“The deepening of the contraction in global activity and trade, accentuated by the rapid spread of Covid-19, has crippled external demand. In turn, this has impacted India’s exports and imports, both of which have contracted sharply in recent months. In view of the importance of exports and imports to the economy, certain measures are being taken to support the foreign trade sector,” Das said.

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