The Hindu : Increasing lines of credit to be routed via Exim Bank

Online edition of India's National Newspaper
Tuesday, Jan 20, 2004

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Business

Increasing lines of credit to be routed via Exim Bank

By Our Special Correspondent

CHENNAI, JAN.19. The Union Government proposes to use lines of credit routed through non-government institutions as a mechanism for promoting exports to countries in which India's market share is limited, according to R. Viswanathan, Joint Secretary in the Commerce Ministry.

Addressing an interactive session with India's commercial representatives in six countries in Western Europe (including members of the European Union and non-members), organised by the Federation of Indian Export Organisations-Southern Region (FIEO-SR) here today, Mr. Viswanathan said the Government proposed to grant lines of credit under an "equalisation of interest'' scheme, whereby the credit would be available to governments/banks/other agencies in the importing countries at LIBOR plus 0.5 per cent (with the Government filling up the rate gap).

Increasingly, government-to-government lines of credit would be reduced and more and more lines of credit would be routed through the Export Import Bank of India (Exim Bank) and commercial banks. His Ministry was talking to the Department of Economic Affairs of the Finance Ministry about opening a line of credit of $1.5 billion over five years to support HIV-related Indian pharmaceutical sales to African countries.

Describing the South Asian Free Trade Area as one of the most significant initiatives in promoting regional agreements in the common interest, he said the Government was taking steps for FTAs with China, South Africa, MERCOSUR, SADC and the Andean Community.

Following an initiative taken by him as Ambassador to Venezuela, the Government was planning to open "business centres'' in Indian missions in several countries to enable small and medium businessmen from India to meet with buyers and trade partners in those countries. The Union Government had decided to become a "partner'' with the Confederation of Indian Industry (CII) in the CII's next Partnership Summit, he added.

Many of the presentations made at the meeting by India's commercial representatives in Austria, Ireland, Norway (including Iceland), Spain, Switzerland and Turkey made a common point that following the economic crisis in Argentina, Brazil and other Latin American countries, many European investors and businesses were now turning to India as a major opportunity. In all these countries, India's present trade was much less than with, say, Germany, Italy or Britain, though they were among the richest in Europe as also the world in terms of per capita income. China was well ahead of India in tapping the opportunities offered by these countries, they said.

Hamid Ali Rao (Austria) cited studies which showed that thanks to its location, Austria would benefit much more than the European Union as a whole as a result of the expansion of the EU to include ten new members from Eastern Europe. R. K. Tyagi (Spain) said the Spanish Government and investors were targeting India for diversification of portfolio and a Casa Asiana (Asian House) had been established recently. J. C. Pant (Norway) said with less than 0.001 per cent of the world's population, Norway accounted for more than one per cent of world GDP, 5 per cent of maritime transport and 11 per cent of oil production. Iceland, which fell in the jurisdiction of the Indian embassy in Norway, offered a lot of scope in the oil and gas sector.

Subrata Bhattacharya (Turkey) said Indian pharmaceuticals had a good scope in Turkey. He advised the Indian textile industry to shift from synthetic fabric to filament for taking full advantage of the Turkish market. D. B. Snehi (Switzerland) suggested emphasis on organic food and organic floriculture and horticultural products with respected to the Swiss market. N. J. Gangte (Ireland) said the FIEO was scheduled to sign an MoU with the Irish Exporters' Association next month.

Rafeeque Ahmed, President, FIEO, said a delegation of "hypermarkets'' from Spain should be invited under the Market Access Initiative of the Ministry.

The Norwegian Government agency for promotion of imports from developing countries should be taken advantage of with assistance from the Indian mission in Oslo, he added.

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