Indian exporters seek Rs30,000 crore interest-free term loan

Industry body Federation of Indian Export Organisations (FIEO) has urged the government to immediately provide Rs 30,000 crore worth of interest-free working capital term loan to exporting companies for easing their working capital liquidity issues and prevent large- scale unemployment that could follow post-lockdown, especially in the labour intensive sectors.

The demand for addressing the liquidity issues of exporters has been made in a letter sent to Prime Minister Narendra Modi by FIEO president Sharad Kumar Saraf.

In the letter, Saraf has said that the country’s exports will take an unprecedented hit in these challenging times with the sector facing over 50 per cent cancellation of orders.

“The worst hit are the lifestyle products such as leather, carpets, handicrafts and apparels which are having over 75 per cent cancellations. This will also put pressure on current account deficit as overseas remittance will decline and so will be FDI/FIIs inflow in the country,” he said, urging the Prime Minister to do something urgently.

In its proposal for interest-free working capital loan for exporters, FIEO said that the burden on the government would only be to the tune of Rs 1,974 crore while the benefits to exporters would be immense and help their operations during the current difficult period.

It said a working capital loan could cover 6 months gross salary and wages, rent and electricity charges and should be given without additional collateral or paperwork to all industrial units who have a clean record with the bank before lockdown. The repayment should be in 18 equal installments after 6 months initial moratorium, the letter to the PM mentions.

The exporters body has also sought EPF and ESIC waiver for three months to support labour Intensive sectors that are in extreme pressure to pay wages, but do not have liquidity or cash flow to even pay the EPF and ESIC. Such units, Saraf informed the PM in his letter, would close down unless support from the government came in.

To allow exporters faster shipments of goods once the markets open up, FIEO has also urged the government to provide subsidy on air shipments and lowering of CONCOR charges. “Provide 50 per cent freight subsidy on air freight to encourage exporters to use air freight to compensate for time loss. CONCOR may also be asked to reduce charges in view of challenging times faced by exporters,” the FIEO letter to PM said.

In other demands, FIEO has urged for time-bound exports refund in 15 days. It also sought that RBI may extend the tenure of pre-post shipment credit. All existing pre and post shipment finance in foreign currency or Indian rupee should be extended on maturity by additional 90-180 days on auto route irrespective of the tenure of contract and sanctioned limit, the letter mentions.

FIEO has also made a strong case for reduction in GST rates on hotels, aviation and travel & tour operators who are bearing the maximum brunt of the present lockdown. It said that GST rates for these sectors should be reduced by 50 per cent for the next 12 months.

In the letter, Saraf also called for a one-time amnesty in advance authorisation/EPCG/EOU and other default in customs duties. This, it said, should be done by waiving interest and penalty and charging only basic customs duty.

Meanwhile the Indian refiners are likely to continue prompt export of refined fuels for at least another two weeks to avoid a complete shutdown after the coronavirus lockdown hit local demand, company officials said.

A three-week lockdown due to end in mid-April slashed state fuel retailers’ local diesel sales by about 26 per cent and petrol by about 17 per cent in March, provisional data shows.

Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp control about 90 per cent of fuel pumps in India, where falling fuel consumption has deepened crude refining cuts by state refiners.

Some have declared force majeure on crude purchases as storage facilities are full.

India’s fuel consumption is expected to recover over the next 10-15 days as recent steps by the government, including movement of trucks to carry non-essential items will push up demand, R. Ramachandran, head of refineries at BPCL, said.

BPCL’s average crude processing has declined to 60 per cent, from 90 per cent reported on March 24, he said, adding: “In order to operate the refineries above the turndown levels and to balance the refinery runs and the inventory build up, it is essential for us to look at selective exports.” Indian state refiners rarely export gasoil and HPCL and Mangalore Refinery and Petrochemicals Ltd sporadically export gasoline.

Agencies