Finance minister P Chidambaram has confirmed that the finance ministry is in a conversation with the Reserve Bank of India to include exports credit in the priority sector category.
“As you know the ministry of finance supports it. But there are some issues which have to be resolved. There is a fear that if you include exports in the priority sector, some other elements in the priority sector may get affected,” Chidambaram said at a conference organised by Federation of Indian Export Organisations on Friday.
Currently, banks have to set aside 40% of their net credit for lending to priority sectors, including agriculture, micro and small enterprises making the cost of funding cheaper for them.
The finance minister also said he feels 59-60 would be the “right” level for rupee against the dollar. While talking at the conference, Chidambaram said even at these levels, the rupee would still be extremely competitive for export purposes.The rupee had hit an all-time low of 68.85 on August 28, but since then gained 9%.
According to the finance minister, global markets have started showing signs of recovery, which is a big opportunity for Indian exporters. “In the US economy, there is an upswing. In Europe too, some countries are showing better growth rate and Japan is bouncing back. So, there is a better opportunity for exporters,” he said.
The finance ministry will also urge Insurance Regulatory Development Authority (Irda) to allow exports up to R1 crore to be automatically covered under the Exports Credit Guarantee Corporation (ECGC) scheme. Under the current norms, only R50 lakh worth of exports are covered automatically by ECGC.
Answering a query by one of the exporters at the gathering, Chidambaram confirmed there is no case for a rollback of export duty on iron ore. “We have looked in to the matter carefully and the decision has been taken. Profit margins are very high, international prices have risen upto levels in the month of April and we have also looked at the quantity which has risen in August and September. Therefore, the decision has been taken that at present there will be no rollback on export duty," he said.