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October 26, 2010 |
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| CEO's Note |
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| Nothing seems right for exporters, MSMEs |
Wary of a volatile rupee and awaiting a rise in demand in key markets during the Christmas season, exporters, especially those from the MSME sector, are now urging the RBI to ensure that 50 percent of the total export credit is earmarked to the Micro, Small and Medium Enterprise (MSME) sector.
With the sector facing constant decline in export credit, perhaps it's time RBI gives clear direction to the banks that exporters should be provided priority in allocation of foreign currency denominated credit.
With banks free to charge interest rates above the base rate, they are surprisingly charging export credit 150 to 200 basis points above the base rate which makes the export credit rate under the Base Rate Regime more costly than in the PLR regime. I think the apex bank should also instruct banks to provide export credit at the base rate itself, at least for now.
And that's not all. The under valuation of the Yuan meanwhile stands to adversely impact Indian exports at a time when China's non-tariff barriers are already posing a major hindrance to the country's exports, especially in the sectors of services, IT, agriculture and pharmaceuticals. China has hardly done much to ensure appreciation of the Yuan and if the international community doesn't give enough pressure, I see tough days ahead for our export community.
However, the bad news for the week do not end here. The MSME ministry has now proposed to do away with the plan to make it mandatory for PSUs and the government departments to procure 20 percent of their total requirements from these units.
What amazes me is the fact that this new proposal to dilute its earlier proposal is in complete contrast to the recommendations of the task force set up by the Prime Minister for the sector. So much for the decisions taken by our authorities!
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| Customs Exchange Rates |
| Currency |
Import |
Export |
US Dollar
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45.60
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44.70 |
UK Pound
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72.40
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70.55 |
Euro
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61.70
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59.90 |
| Japanese Yen |
54.40 |
52.80 |
| Get the latest rates for October |
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