GJEPC urges government to set export credit limits in dollars
today Nov 5, 2018
The Gem and Jewellery Export Promotion Council (GJEPC) approached the government last week and asked it to lean on the Reserve Bank of India (RBI) and set export credit limits in dollars.
As diamond traders are grappling with the depreciation of the Indian rupee, they have asked high street banks to tie their export credit limits to the US dollar in hopes of greater stability. The depreciation of the rupee has meant that the funds cover available to exporters has been reduced for polished stones and jewellery. The Indian rupee has dropped in value by around 12 percent this year.
“We have requested the commerce secretary… to take up the matter [of] sanctioning export credit limits in dollar terms rather than in rupee terms, given the recent INR depreciation that reduces the foreign currency available for pre- and post- shipment credit,” ET Bureau reported that Pramod Agrawal, the Chairman of the GJEPC, said in a statement. “Rupee limits for our sector that imports raw materials for exports have affected the exporters from accessing adequate bank credit due to the recent INR depreciation.”
The GJEPC approached the Commerce Ministry concerning the matter as it believes that trade has been negatively impacted by the decrease of the foreign-currency component of export credit because of the rupee’s recent poor performance.
Polished diamond exports fell in September and October and the hope of the GJEPC is that tying the export credit limit to the US dollar will help to counter this. The GJEPC wants the Commerce Ministry to take the matter up with the Banking Secretary and is awaiting a response.
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