Friday, October 14, 2011

Exim Bank to issue $5-bn fresh line of credit to Africa

Export-Import (Exim) Bank of India, the apex financial institution fully owned by the government of India, will be releasing a fresh line of credit to Africa in the next three years, according to bank’s managing director T C A Ranganathan.

Speaking on the sidelines of the inaugural day of the India-Africa Business Partnership Summit here on on Wednesday, Ranganathan said: “At present, our exposure to Africa, in terms of sanctioned credit line, is more than $3.5 billion (which has not yet been fully disbursed), with the outstanding being around $2.75 billion. With the additional line to be issued in three years, we expect the total book size of Exim Bank on Africa to double in the next five years.”

Stating that the Exim Bank of India’s intent was to promote and provide entry to various Indian entrepreneurs to Africa, besides encouraging them to bid for projects in that continent, he said Indian entrepreneurs need to do projects on their own in Africa, as that was how their counterparts in Europe, the US, China and other parts of Asia were doing there.

“There is a vast growth that is taking place there. The continent is growing rapidly and holds huge potential. Therefore, Indian entrepreneurs should explore that continent,” he said, adding bilateral trade between India and Africa had more than doubled from $25 billion in 2006-07 to $53.3 billion in 2010-11 due to the rise in both exports to and imports from the African region.

Indian exports to Africa had risen from $10.3 billion in 2006-07 to $21.1 billion in 2010-11, primarily due to an increase in exports of transport equipment and petroleum products, Ranganathan said.

Besides providing line of credit to the continent, he said, Exim Bank of India was also financing Indian companies investing in Africa or those Indian companies selling in Africa through buyers’ credit or through investment finance.

“For instance, we had assisted Tata South Africa for their vehicles to export to various members countries in Africa by giving a buyers’ credit to the governments there. In April this year, we have launched a new scheme where we will take insurance protection from a national insurance export account and give non-recourse long-term buyers’ credit on behalf of the Indian project exporters if the counter party is a sovereign of good standing,” Ranganathan said.

Stating that the Exim Bank of India had been giving credit lines to various banks in Africa, with the latest being $100 million to the Nigerian Export-Import Bank, he said the bank was trying to promote all forms of business in that continent, based on the request of the host country and the projects that they submitted to the Indian government.

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Exporters get Rs 900 crore relief package

NEW DELHI: The government on Thursday announced a Rs 900-crore package for exporters to help them tide over the slowdown in developed markets and rising input costs. RBI has already announced interest subsidy of 2% on rupee export credit for handicrafts, handlooms, carpets and small and medium exporters. Along with the interest subsidy the total relief package for exporters stands at nearly Rs 1,700 crore.

Sectors which would benefit from the government move on Thursday include engineering goods, pharmaceuticals and chemicals, apparels and others. Commerce minister Anand Sharma unveiled a special focus market scheme, which would help diversify the country's exports to new markets. Under the scheme, an additional 1% duty credit would be provided to exporters, who ship their goods to markets in Latin America, Africa and CIS countries. The total number of countries in the scheme is 43 and includes new entrants Cuba and Mexico.

"These are not easy times for the exporting community. The shroud of economic uncertainty still envelopes the global economy. The troubles which began with a sovereign debt crisis in Europe last summer continue and still linger. Actually things have become even more serious thereby sapping both business and consumer confidence in one of our largest markets - US. We have to ensure that export growth continues," Sharma said. The commerce ministry has undertaken a series of measures to open up new markets to counter the slowdown in the country's traditional markets like US and EU.

"My guess is in a ballpark range, excluding interest subvention, it will be roughly around Rs 800-900 crore. For interest subvention it will be around Rs 800-Rs 1,000 crore... roughly about Rs 1,700 crore," commerce secretary Rahul Khullar said when asked about the total outgo on the schemes.

Fifty products in engineering, pharmaceuticals and chemicals would get special bonus of additional 1% of export value between October and March in the current financial year. "It is a Diwali bonanza. We were not expecting this much," said Ramu Deora, president of the Federation of Indian Export Organisation (FIEO).

Sharma also said the government had set up a panel comprising the finance secretary, commerce secretary, and secretary financial services which would address the issues of availability of dollar credit. "I have discussed the issue with the finance minister and we will ensure continued availability of dollar credit," he said.

The commerce minister was confident of meeting the $300 billion target for exports set for 2011-12. But he said the global economic slowdown posed a tough challenge. Exports are estimated to have risen 52% to $160 billion in the first half of the current financial year on the back of robust performance from engineering goods and petroleum products.

Industry groups cheered the move saying it would help Indian exporters in the current challenging global environment. "Additional benefits in terms of Special Focus Market Scheme, Special Bonus Benefit Scheme and support to apparel sector would be vital in stepping up the competitiveness of our exports," said Rajiv Kumar, secretary general of Ficci.

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