Inflation dips to 6 61

The government on Friday approved Rs 350 crore for increasing the insurance cover
for the small and medium exporters. The scheme will
also cover the exporters engaged in sectors facing slowdown amidst threats of defaults by overseas buyers.

The Cabinet Committee on Economic Affairs (CCEA) approved allocation of Rs 350 crore to the Export Credit Guarantee Corporation of India (ECGC), which will increase the risk cover to MSME exporters from 85% to 95%.

However, the same benefit for other than MSME will be limited to textile (including handicraft and handloom), gems and jewellery, leather, engineering products, carpets, project goods, automobile components and chemicals. "Exporters need additional cover in the face of slowdown," home minister P Chidambaram told reporters after the CCEA meeting.

With the cover going up to 85%, banks, it is expected, will not continue to finance MSME exporters. The insurance coverage against the non-payment of buyers will help the exporters in closing a deal too with the buyers in the developed world, which are worst affected by the present global turmoil. The ECGC cover for the banks would go up to 85% from 75%.

The additional risk cover would be available up to June 30, 2009, Chidambaram said.

However, the scheme will not cover the sports good industry, which is one of the most labour intensive industry, which is severely affected by the global recession. The export orders have fallen by more than 25% to 30% in last two months, said Sports Goods Export Promotion Council (SGEPC) in a statement. It is feared that if the crisis prevails in the next few months, more than 50,000 workers will be rendered jobless in this industry. The industry provides employment to the weaker section of the society including women. The labour is scattered in and around two major manufacturing centers i.e. Jalandhar in Punjab and Meerut in U.P.

Main countries importing sports goods from India are Europe, USA & Australia. Since recession has gripped these countries/regions, the meltdown is being felt by the Indian Sports Goods Industry.

SGEPC said the sports goods and toy sector has even been ignored in the recent fiscal package announced by the Govt., despite the fact that this sector has been declared as a labour intensive sector in the foreign trade policy announced by the government in the beginning of this year.

The global financial crisis has begun impacting exports significantly and the export target of 200 billion dollar for the current year is unlikely to be achieved, official sources said.

"The shortfall may be between five to 10 per cent," an official said, adding the number of exporters not getting their dues from buyers in the US and Europe would also rise.

After showing a handsome growth of 30.9 per cent for the first half of the current fiscal, exports slipped into negative territory. Exports decelerated by over 12 per cent in October.

So far, over 7,00,000 workers have been laid off in the textile industry, while 1,00,000 people have lost jobs in the gems and jewellery sector.

http://timesofindia.indiatimes.com/Business/India_Business/Exporters_get

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Inflation dips to 6 61