New Delhi, January 2 (KNN) CII’s National Committee for EXIM Chairman Sanjay Badhya said Indian exporters are facing significant liquidity challenges, compounded by high interest rates and a pronounced shortfall in export finance.

These factors are weakening their competitiveness in global markets, especially for MSME exporters, who are the backbone of India’s export ecosystem.

To mitigate these challenges, Budhiya urges the government and banks to collaborate for effective solutions. He stressed the need to extend the interest equalization scheme, which expires on December 31, 2024, for another three years to benefit all manufacturing exporters, including MSMEs. He noted that the limited expansion of the scheme puts Indian manufacturers at a disadvantage.

Budhya proposed to increase the interest subsidy from 3 percent to 5 percent for pre- and post-shipment credit for key sectors like leather, engineering, apparel, and gems and jewellery.

Additionally, they recommended extending letter of credit facilities for large overseas projects and widening the coverage of export credit guarantees.

He suggested increasing the coverage of Export Credit Guarantee Corporation of India from Rs 50 crore to Rs 100 crore to increase credit access.

The Federation of Indian Export Organizations (FIEO) echoed these demands and urged the government to extend the scheme for five years in the upcoming Union Budget.

FIEO highlighted a 5 per cent decline in export credit from Rs 2,27,452 crore in March 2022 to Rs 2,17,406 crore in March 2024, with over 40 per cent decline in priority sector credit for exports during the period.

Budhya also called for smooth implementation of the RoDTEP scheme for direct transfer of benefits to exporters’ bank accounts to reduce delays and inefficiencies.

Looking ahead, Budhia expressed concern over US President-elect Donald Trump’s threat of reciprocal tariffs on Indian goods.

While the tariffs could disrupt trade flows and reduce competition in sectors such as engineering and textiles, he noted potential opportunities for Indian exporters to fill the supply chain gaps left by China. .

India’s exports reached USD 778 billion in 2023-24 and are expected to cross USD 800 billion in 2024-25. However, the challenges of global policy changes and geopolitical turmoil are creating uncertainty over trade prospects.

(KNN Bureau)