Exporters body FIEO has sought immediate intervention of the government and RBI to resolve issues related to payment mechanism for Iran and flow of credit to push shipments.
Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta said that a clarity is required on product coverage under rupee payment mechanism to Iran.
“Exporters have pointed out that UCO bank branches are not clear about products, which can be exported under such mechanism. The main problem is related to Engineering and Chemical products,” Gupta told PTI.
He said that the understanding of trade is that if the end use of product is not under the sanctioned list, or exports is not to the Iranian government, it should be allowed for exports under the Rupee Trade Mechanism.
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“A clarification will help exporters to take such orders and push for quantum jump in our exports to Iran,” he said.
He also said that banks have expressed their inability to handle documents of exporters for shipments to Central Asian countries, if there is a reference to Bandar Abbas as a transit port in Iran.
“This has affected the movement of cargo through INSTC which Government of India is promoting as an alternative route being time and cost effective,” he said.
It is requested that directives to banks be issued for handling of documents properly for transit goods through Iran, where the combined transport bill of landing shows the destination to be Afghanistan/Russia/ Central Asia or any other non-restricted countries, he said.
It is expected that a meeting of bankers and exporters is soon being convened by the Finance Ministry to address some of the concerns.
Talking about flow of credit to export sector, he said that the recent data of the RBI for August, 2018 shows a decline of over 50 percent in export credit as compared to the corresponding month in 2017.
“MSME exporters are the worst sufferer and the lack of credit equally affects our export performance,” he said.
He added that there is a need for increasing the flow of credit to export sector by encouraging banks and also ensuring online filing, processing and monitoring of export credit.