MUMBAI, May 6 (Reuters) - A Reserve Bank of India panel on
Monday proposed raising the ceiling for foreign currency credit
from $20 million for exporters, among other policy incentives to
boost a sector that has contracted significantly due to a fall
in global demand.
The panel also said foreign currency borrowing by banks for
lending to exporters should be exempted from banks' net demand
and time liabilities (NDTL) calculations to eliminate costs
related to cash reserve ratio and statutory liquidity ratio.
Indian exports for the full year fell to $300 billion, well
below the $350 billion target as the economy likely registered
its weakest growth in a decade. The trade gap has put pressure
on the rupee, feeding inflation.
India's current account deficit widened to an all-time high
of 6.7 percent of the gross domestic product in
October-December, due to heavy oil and gold imports and muted
The panel suggested widening the scope for interest
subvention, or a lower rate of interest on rupee export credits,
to a larger segment of exporters including electronics,
engineering goods and particularly the automotive sector, rather
than only employment-oriented sectors.
The report also called for framing an interest subvention
policy for long-term export credit. The panel also suggested
scrapping withholding tax on funds raised overseas.
(Reporting by Neha Dasgupta and Shamik Paul; Editing by Prateek