Suggestions in the Reserve Bank of India -appointed G. Padmanabhan Committee’s report for improving financial flow to the exporters, extension of financial support from alternative sources, rationalisation of transaction costs and risk mitigation, among others, are seen with optimism by the knitwear exporters in Tirupur cluster for improvement of business.
The Committee, constituted for evaluating the entire gamut of facilities/services provided by banks to exporters, had examined the gaps in the financial systems and procedures that were obstructing the flow of finance to exporters, and then formulated the suggestions which were made public by RBI on Monday evening.
“The recommendations, if implemented expeditiously, will definitely going to do a world of good for the exporters who are badly looking for simplification of the existing documentation requirements and easier assess to credit,” G.R. Senthilvel, an apparel exporter and secretary of Tirupur Exporters and Manufacturers Association, told The Hindu.
The proposal for raising of foreign currency loans on a pool basis for extension of export credit to exporters is seen as one of the major steps by the experts and exporters for getting the cost of funds reduced.
“The move will be beneficial for all apparel manufacturers who are looking for modernisation, capacity creation and technology upgrading considering that there is a circular by RBI permitting refinance of high cost rupee loans through External Commercial Borrowings (ECB) mode,” S, Dhananjayan, industry consultant and chartered accountant, pointed out.
Another big concern for the exporters has been the high cost to export (value) and time to export (days) per transaction which include costs for documents, administrative fees for customs clearance and custom broker fees.
In this matter, the Committee has recommended a focused and speedy implementation of the new single window system of clearance which was conceptualised by Union Government last year.