BANGALORE: Commerce and Finance Ministry are engaged with the Reserve Bank to include export sector under the priority sector lending of banks, a move that will help exporters get easy and affordable credit.
A senior commerce ministry official said that credit is expensive in India.
"Commerce ministry has been successful to take the Finance ministry on board to engage with RBI to workout a package for the export sector, that export sector lending should be a priority sector," Joint Secretary in the Commerce Ministry A K Tripathy said here at a function.
Indian exporters have been demanding inclusion of export credit in priority sector lending.
"If this materialises it will be a big game changer for the export industry," 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 lending ( PSL).
According to the the Federation of Indian Export Organisations (FIEO), the flow of credit to the export sector is declining and is a cause of concern.
"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," FIEO had recently said.
Tripathy also said reduction in increasing transactions cost of exporters would help in pushing the country's exports.
He said the country's merchandise shipments would be increased by about 6-7 per cent by eliminating transactions cost.
He added that the commerce ministry is working on ways to reduce the cost.
Tripathy was addressing industry representatives at Industry consultation programme on 'WTO Trade Facilitation Agreement and FTA Challenges', organised by CII.
Admitting that labour is the major difficulty faced by the manufacturing sector, Tripathy said "current labour laws, rules, procedures are impediment."
"We know that our manufacturing sector is undermined because of huge amount of issues from power sector,fuel sector and unavailability of natural resources leading to imports," he added.
On GST, he said "it is something that is to be happening sooner than later; it is calculated that GST will in turn be adding a percentage of GDP if not more."