Commerce Secretary Sunil Barthwal Addresses Trade Finance Challenges for Exporters in Government Meeting

Commerce Secretary Sunil Barthwal recently convened a meeting with officials from various government departments and export promotion councils. The discussion focused on trade finance issues affecting exporters, according to an official source. Key topics included the need for low-interest credit, enhanced insurance coverage, loan coverage, and priority lending.

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The meeting occurred amidst growing concerns among exporters about declining bank credit and its impact on exports. While exports increased by 15% in rupee terms between 2021-22 and 2023-24, outstanding credit in March 2024 fell by 5% compared to March 2022, as reported by exporters.

Export Credit Concerns

The Federation of Indian Export Organisation (FIEO) highlighted that export credit growth is lagging behind the country's rising exports. FIEO noted that the value of export credit outstanding decreased to Rs 2,17,406 crore in the March 2024 quarter from Rs 2,27,452 crore in the same period last year.

An industry official mentioned that the meeting also explored ways to increase the flow of finance to support exporters. A presentation on trade finance was made during the meeting, setting an agenda for further discussions.

Trade Deficit and Export Decline

India's exports experienced their steepest decline in 13 months, dropping by 9.3% to USD 34.71 billion in August due to global economic uncertainties. Meanwhile, the trade deficit reached a 10-month high of USD 29.65 billion.

During April-August of this fiscal year, exports saw a marginal increase of 1.14% to USD 178.68 billion, while imports rose by 7% to USD 295.32 billion. The merchandise trade deficit for April-August 2024 stood at USD 116.64 billion compared to USD 99.16 billion during the same period last year.

The meeting on Monday was chaired by Barthwal and attended by officials from the finance ministry, the Reserve Bank of India (RBI), and representatives from export promotion councils. The discussions aimed at addressing the challenges faced by exporters due to declining bank credit.

The focus remains on finding solutions to enhance trade finance support for exporters amid challenging global economic conditions. The agenda set during the meeting will guide future discussions aimed at improving financial support for India's export sector.