India must diversify exports both in products and destinations, and concentrate on higher growth in South, South East Asian, and African economies for future markets. Yaduvendra Mathur, chairman and managing director, Export-Import Bank of India says in an interaction with Sumit Sharma.
How will slowing global trade affect India?
The worst is behind us. The macro-economic scenario has improved and companies are seeing demand pulls. There are contrarian studies and reports but I am an optimist. The traditional export markets for Indian companies may still not provide the opportunities they predicted 6-7 years ago, but we see traction in demand. The recent IMF outlook has projected improved growth for India.
Could it hurt exports and local growth?
The sharp slowdown in GDP growth and industrial production since 2008 caused challenges for the economy. Prolonged recessionary trends in some advanced countries, unrest in Middle-East and forex volatility adversely impacted exporters. Global trade figures of the first three months this year have not been encouraging, but a strong government has lifted the morale.
Do you see a role for Exim in the new ‘Make in India’ mission?
If India becomes the factory of the world, a large portion of the produce will also cater to international markets. Being India’s purveyor of international trade, Exim Bank will play a definitive role.
Is Exim Bank seeking more capital?
We got additional equity of Rs 1,300 crore in 2014-15, which took our paid up capital to Rs 5,000 crore. At present, we can lend 10 times our net owned funds (NOF), which restrict our capacity to support project exports and help exporters secure newer markets and diversify. RBI has allowed 11 times leverage till March 31, 2015, and we have requested RBI that the leverage be increased to 15 times of the NOF as a special case for development financial institution.
Which regions and factors are crucial for India to grow trade?
Near-shore countries should be our focus. East and South Asia may grow 5.8 per cent in 2014 and Africa’s growth of 4.7 per cent will be crucial. Myanmar too cannot be ignored. To improve export competitiveness, we should focus on infrastructure facilities like continuous electricity and better labour laws.
Long-term perspective plan for Exim Bank?
To support exports on medium and long-term credit basis with higher associated risks. Our focus will be on business verticals of finance for project exports; lines of credit; and overseas investment finance.