The article below details the intricacies of how FIEO seeks fiscal and non-fiscal support for exporters. Read up to get in-depth knowledge of RBI Initiatives for FIEO in India
Fiscal support is the financial incentives provided in the form of discounts, savings on tax, etc. Non-fiscal support, on the contrary, is the benefit provided in a non-monetary form. Despite what most people believe, the rupee is performing well among all the Asian currencies. As a result, the Federation of Indian Export Organisations (FIEO) recommended to Commerce and Industry Minister Piyush Goyal that the government look into both fiscal and non-fiscal incentives as a means RBI Initiatives for FIEO in India.
The FIEO has been prompt in highlighting the challenges and issues faced in international trade. As per FIEO Membership, India’s future prospects of exports could be in little danger. This body went on to discuss the scenario of Global Trade, and exports and how the trace has been facing severe issues of headwinds post the Russia-Ukraine war. Due to the impact of the war there is a significant impact on the prices of basic things like food.
The organisation that represents Indian exporters argued that this time around, the depreciating rupee is eroding the price competitiveness of Indian exporters in overseas markets.
Performance of the Indian Rupee Against Other Currencies
According to FIEO‘s presentation, the Euro, Swiss franc, British pound, Swedish krona, Japanese yen and Canadian dollar all depreciated by 11.6% as opposed to the U.S. dollar. However, the rupee is the second best-performing currency in Asia, falling only by 7%.
There was a gathering of representatives from various industry bodies and export promotion councils to devise a strategy for boosting trade and exports. In July, India’s merchandise exports fell by 0.76% , marking the first time this has happened in the last 20 months. The country also experienced its highest trade deficit in a single month ever.
But not everything is going downhill, even when the economy is under severe depression. As per the experts, the rupee as a currency is performing extremely well in Asian countries. It has competition with the US dollar, though. Exports to the US have proven beneficial due to its strong ruling currency eventually benefiting the exporters doing business with it.
Since currencies like Euro and yen are not performing well in the economy, India is facing problems with exports with the countries which use these currencies. These facts lead to the urgent need for fiscal and non-fiscal support to push the country’s export business.
RBI Initiatives for FIEO in India
There is immense emphasis given to interest rates and liquidity. Currently, the interest rates have been tightening, leading the micro, small and medium-sized enterprises(MSME) to get all the credit at 10% and not less than that. There are also chances that RBI might just increase the credit percentage by October. RBI currently is very inclined towards the exports increase and making sure of a higher impact of import export online in rupees.
The foreign trade policy is currently being refined by the Commerce Department, which plans to present it no later than 30 September. In the face of global headwinds, the government has high hopes that the Centre will consider the concerns of exporters.
Because the Reserve Bank of India (RBI) is tightening its monetary policy, the Federation of Indian Export Organisations (FIEO) has proposed that interest equalisation benefits for MSME manufacturers be increased to 5% from the current level of 3% and that the rate of duty on 410 tariff lines be raised to 3% from the current level of 2%.
However, exporters argued that due to the increase in interest rates, MSMEs are being forced to borrow at interest rates of 10% or higher, which is higher than the levels that existed before the COVID crisis. It is anticipated that interest rates will continue to rise.
The monetary policy committee, which is led by the RBI, decided to raise the repo rate for the third time in a row by 50 basis points, bringing it back up to the level of 5.4% as it was before the pandemic.
During a press conference, to find IEC code brought attention to several issues and challenges in international trade, with a particular emphasis on India’s exports and the country’s prospects.
FIEO emphasised liquidity and interest rates, saying that as a result of the firming up of interest rates, MSMEs are getting credit at not less than 10-11%.
According to the export organisation, “this is likely to go up even further as the RBI is expected to increase the same by the same amount once again in October.”
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Conclusion
That was all you need to know about FIEO’s action to support exporters and other steps taken by RBI for RBI Initiatives for FIEO in India. If you are an exporter and want to know intricate details about FIEO, then you can reach out to the Vakilsearch legal experts. The professionals here are trained and experienced and will assist you at every point.
