Liquidity problem of exporters needs to be addressed on priority basis: FIEO

New Delhi, Jan 11 (KNN) With a view to addressing the liquidity problems faced by exporters, Federation of Indian Export Organisations (FIEO) has raised concern over the issue of exporters borrowing at a high cost for longer duration and at the same time blocking money in legitimate refunds like Duty Drawback, Excise Rebate and VAT Refund.

FIEO President M Rafeeque Ahmed said that the liquidity problem of the exporters needs to be addressed on priority basis so as to sustain exports.

“Exporters are borrowing at a high cost for a longer duration due to financial crises across the globe,” he said. 

“At the same time, they are blocking their money in legitimate refunds like Duty Drawback, Excise Rebate and VAT Refund for duration of at least four months or so, which in turn is blunting their competitiveness by over 5 per cent in most of the cases,” he added.

Ahmed said that he has already highlighted a few months back that the liquidity problem will affect exports and the same is slowly being reflected in export data.

“When in many of the products and commodities, exports are done at wafer thin margins of 5-7 per cent; how can Indian exporters compete, when saddled with these costs?” he asked.

While reacting to the trade data for the month of December, 2013, the exporters’ body said that while reduction in trade deficit from USD 146 billion to USD 110 billion in April-Dec’ 2013 as compared to the corresponding period in 2012 provides some solace, he is not happy with a modest growth of 3.49 per cent in exports in December, 2013.

FIEO Chief said that it may not be possible to contain imports which are presently within manageable limit due to softening of crude prices, metals and commodities. Moreover, revival of manufacturing will push imports of key raw materials and capital goods. Therefore, all out efforts are required to keep export growth in the double digit.

FIEO further said Gems and Jewellery sector is also affected by drop in gold prices by about 28 per cent in the world market in 2013 which reduced value-wise realization of the sector. Pharmaceutical exports is facing stringent regulatory requirements in US and EU while exports of guar gum, spices, machine tools, electronic goods, silk textiles, woollen textiles suffered due to slackening in demand.

Exports to Latin American countries particularly Brazil, Chile, Venezuela and Panama and East Oceania countries like Australia, New Zealand, besides, West Asian countries and CIS countries also suffered significantly pulling overall export growth.