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Commerce Ministry wants exports included in priority lending

NEW DELHI: The Commerce Ministry has asked the Finance Ministry to include export credit in priority sector lending of all banks to boost overseas sales.

"We have taken up this matter with the Finance Ministry. It will help exporters in getting easy and affordable credit from banks," 
Director General of Foreign TradeAnup Pujari told PTI. 

At a Board of Trade meeting on August 27, export promotion councils and industry leaders demanded the inclusion of export credit in priority sector lending, Pujari said. 

"Exporters have told us that total credit from banks to the export sector is falling and needs to increased in order to give support to the sector," he added. 

A communication regarding the issue has been sent to the Finance Ministry. 

The flow of credit to the export sector is declining and is a cause of concern, said Ajay Sahai, Director General of the 
Federation of Indian Export Organisations. 

"Between 2007-08 and 2012-13, the share of export credit in total credit has come down from 19.82 per cent to 11.36 per cent. A sharp decline of 8 per cent substantiates the claim of the export sector, which suffers from a liquidity problem," he said. 

At present, only foreign banks are required to disburse 12 per cent of their credit under the priority sector to export companies. For other banks, export finance is outside the 40 per cent priority sector mandate. 

Although the country's merchandise exports grew 11.6 per cent in July, overseas shipments from major sectors such as engineering and textiles are still in the negative zone. 

Engineering goods, gems and jewellery, textiles and petroleum products account for almost 80 per cent of the country's exports. 

Slowing growth in exports and increasing imports are putting pressure on the current account deficit. The deficit, which indicates the excess of imports of goods, services and transfers over exports, touched 4.8 per cent of 
GDP (or USD 88.2 billion) in 2012-13. 

In the current fiscal, the government has targeted a current account deficit of 3.7 per cent of GDP (or USD 70 billion).