My dear fellow exporters,
After several years of discussions and negotiations, India finally decided not to join the Regional Comprehensive Economic Partnership (RCEP), a trade agreement comprising India, China, Japan, South Korea, Australia, New Zealand and ten ASEAN Member Nations and containing 47.6 percent of the global population. The present form of the agreement, as viewed by the Indian government, did not satisfactorily address India’s outstanding issues and concerns on getting flooded by imports that would ultimately put its indigenous industries at risk.
Among the RCEP member nations, India is already having trade agreements with ASEAN, Japan and Korea while India’s trade with Australia and New Zealand in terms of engineering sector is not very significant. Therefore, signing RCEP deal for India would effectively have been signing a trade agreement with China. This was apprehended to make Indian market virtually a dumping ground of China’s surplus production causing Indian manufacturers, especially MSMEs to go out of business. India as a consequence, demanded specific protection for its industries from unwanted imports, especially from China as India ran trade deficit with all RCEP Members and 30 percent of its total trade deficit came from China.
EEPC India welcomes the decision of the government to opt out of RCEP unless India’s objections are fully resolved. It is felt that the move would be beneficial for domestic industry especially MSMEs and encourage domestic production through ‘Make in India’ initiative.
Ravi Sehgal
Amidst India’s faltering merchandise export growth and prolonged contraction in export credit growth, exporters have at least seen some silver lining as both the domestic government and the monetary regulatory authority RBI have been in consultation to ease priority sector lending norms for exports in order to ensure higher flow of credit towards export sector, according to news source. The Commerce and Industry minister has very recently held a meeting with senior public-sector bankers to push for easier and higher flow of credit disbursalfor exporters at cheaper rates. The government is expected to announce a slew of measures to boost export growth very soon while the RBI is also likely to change credit norms in favour of the exporters.
The measures to reinvigorate export credit has been the demand of the exporters as many MSME exporters have already been forced to go out of business due to excessive financial crunch and many are facing the same threat. To ensure availability of hassle-free credit to small exporters is a priority for the commerce minister.According to the latest RBI data, export credit of scheduled banks shrank as much as 36.1% year-on-year as of June 21, even on a low base of 42.7% contraction a year earlier.
The interest subvention provided to the exporters to the extent of three to five percent on bank credit has to make way for suitable alternative as WTO has raised objection to this kind of schemes on the ground of non-compliance. An alternative mechanism to facilitate export credit is desperately required. EEPC India has already suggested refund of embedded taxes for the exporters.
EEPC India, as a premiere trade and investment promotion body under the Ministry of Commerce and Industry, wholeheartedly thank the government for its initiative to revive exports from India.