Relief for Exporters As RBI Extends Credit Period To 15 Months From One Year

In the external sector, India’s merchandise trade slumped in April 2020, with exports shrinking by 60.3 per cent and imports by 58.6 per cent (y-o-y), respectively.

New Delhi: In an effort to push the manufacturing sector in India, RBI governor Shaktikanta Das has increased export credit period extended to 15 months from one year. The central bank had earlier extended scheme providing interest subsidy for post and pre-shipment export credit by a year till March 31, 2021. There have been demands from exporters to extend the scheme in the wake of the coronavirus crisis. For (Export-Import Bank of India)-Exim bank the RBI has decided to extend a line of credit of Rs 15,000-core for a period of 90 days with a rollover of up to one year. The period for completion of outward remittances has also been extended for importers from 6 months to 12 months. This will be applicable for imports other than gold, diamonds, precious stones, and jewellery.

In the external sector, India’s merchandise trade slumped in April 2020, with exports shrinking by 60.3 per cent and imports by 58.6 per cent (y-o-y), respectively.

While imports contracted in all 30 commodity groups in April, exports contracted in 28 out of 30 groups. The trade deficit narrowed in April 2020 – both sequentially and on a yearon-year basis – to its lowest level in 47 months.

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On the financing side, net foreign direct investment inflows picked up in March 2020 to $ 2.9 billion from $ 0.8 billion a year ago. In 2020-21 so far (till May 18), net foreign portfolio investment (FPI) in equities increased to $ 1.2 billion from US$ 0.8 billion a year ago. In the debt segment, however, there were portfolio outflows of $ 3.8 billion during the same period as compared with outflows of $ 1.4 billion a year ago.

By contrast, net investment under the voluntary retention route increased by $ 0.7 billion during the same period. India’s foreign exchange reserves have increased by $ 9.2 billion in 2020-21 so far (up to May 15) to $ 487.0 billion – equivalent to 12 months of imports.