Reserve Bank eases norms for loans to exporters

In order to enhance Indian exports, the Reserve Bank of India (RBI) has eased norms for loans to exporters. The RBI, in its notification, stated that the domestic exporters can now get long-term loans from banks for up to 10 years to service export contracts. Earlier the exporters were allowed to get loans up to one year. Further, the central bank notified that banks can make such payments to exporters with a satisfactory track record of three years and adjust these payments against future exports. However, banks cannot charge interest rates exceeding 200 basis points above LIBOR. Furthermore, exporters who receive loans of $100 million or above need to report the transaction immediately to the central bank, the notification added. During the financial year 2014, Indian exports shipments touched $312.35 billion, registering 3.98% growth over the previous fiscal year but remained below the set export target at $325 billion. India’s export has been hovering near $300 billion over the last three fiscal years and it has become imperative to boost country’s exports and enhance its contribution in the world trade. In India, Foreign Trade Policy (FTP) governs all exports and imports related activities and mainly aims at enhancing the country's exports. The five-year FTP (2009-14) ended on March 31 and the new government formed after the general elections will introduce new FTP for the period 2014-19 in June 2014. Meanwhile, new FTP is likely to promote exports of specific products in specific geographies and would also abolish conventional method of exports by focusing more on areas like branding of products in the global markets, exports of services and hi-tech products and new strategy for marketing.