Press Information Bureau

Government of India

Ministry of Finance

07-December-2012 18:22 IST

Following the deregulation of interest rates on export credit the rate of interest to be charged to exporters is now left to the commercial judgment of the banks. Guidelines on grant of timely, adequate and hassle free flow of export credit have been issued to all Scheduled Commercial Banks vide Reserve Bank of India Master circular on Rupee/Foreign Currency Export Credit and Customer Service to Exporters dated 02.07.2012.

However, to provide relief to labour intensive sectors, the Government of India has extended interest subvention of 2% on pre and post shipment rupee export credit in the following sectors w.e.f. April 1, 2012 to March 31, 2013 on the same terms and conditions.

Handicraft, Carpets, Handlooms, Small and Medium Enterprises (SMES), Readymade Garments, Processed Agriculture Products, Sport Goods and Toys.

Further, in view of the difficulties faced by exporters on account of the weakening of external demand, RBI has taken following measure;

(i) Period of realization and repatriation to India of the amount representing the full export value of goods or software was enhanced from 6 months to 12 months.

(ii) AD Category-I banks have been permitted to allow exporters to receive advance payment for export of goods which would take more than one year for manufacture shipping.

(iii) Powers have been delegated to A.D. Category-I banks to open and maintain Diamond Dollar Accounts by Diamond exporters with them with relaxed norms and so on.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha today.

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DSM/RS/bs

 

Interest subvention extended to labour intensive export sectors to subsidise rupee pre and post shipment export credit access. Deregulation of bank lending rates makes interest on export credit subject to banks' commercial judgement, accompanied by supervisory guidance to ensure timely export finance; the Government authorised targeted interest subvention on rupee pre and post shipment export credit for specified labour intensive sectors. Regulatory measures include extension of the period for realisation and repatriation of export proceeds, permission for advance payments where manufacture/shipping exceeds one year, and delegation to authorised banks to open specialised foreign currency accounts for diamond exporters under relaxed norms.