The survey revealed that 40 percent of exporters expect a decline in exports for the current financial year, while 22 percent anticipate up to 5 percent growth. India’s exports grew by 1 percent, reaching $213 billion in the first half of the current fiscal year. The US and UAE were noted as key growth markets by most exporters.
Of the 678 exporters surveyed, 39 percent cited high interest rates as a top concern. Freight rates, which have increased due to tensions in the Persian Gulf and shipping line availability, were identified as another major problem. Although the government has attempted to address freight issues, borrowing costs remain high.
Currently, 22 percent of exporters borrow at rates between 10-12 percent. With the Reserve Bank of India’s repo rate set at 6.5 percent, lending rates are elevated compared to other regional countries like China (3.1 percent), Vietnam (4.5 percent), Malaysia (3 percent), and Thailand (2.25 percent). Lenders are maintaining a spread of almost 6 percent when lending to exporters, a long-standing issue. Proposals to extend interest subsidies have been stalled.
Meawhile, India is reportedly planning a new loan scheme for small and medium-sized businesses (SMEs) and ecommerce exporters that won’t require collateral. This initiative comes as the country aims to reach $2 trillion (around ₹168 lakh crore) in exports by 2030, ET reported citing officials aware of the discussions.
Although the specifics of the scheme are still being worked out, the government is in talks with banks and the Reserve Bank of India (RBI) to create a program that provides these loans based on the exporters’ past performance. An official, who wished to remain unnamed, explained that the goal is to increase export credit, create new financing options, and lower interest rates for exporters.Also Read: Govt working on easier loans for SMEs, ecommerce exportersSmall exporters face additional hurdles, as 82 percent reported having to provide security to obtain loans. The commerce department is exploring ways to ease credit flow and utilise Export Credit Guarantee Corporation (ECGC) guarantees to help lower borrowing costs.
Freight costs are particularly impactful, with 82 percent of survey respondents affected by high rates. Additionally, 86 percent reported that logistics affected their competitiveness, with ocean freight being the primary concern.
(with ToI inputs)