MUMBAI: Engineering exports from the country can surpass the $70 billion target in 2014-15 if 3 per cent interest subvention is extended for the entire financial year, EEPC India said today.

“This will have a multiplier impact on engineering exports and we could surpass the target of $70 billion by another 5-10 per cent, if interest subvention of 3-4 per cent is given to the entire engineering sector even in this fiscal,” Engineering Export Promotion Council (EEPC) India chairman Anupam Shah said in a statement.
He said interest subvention of 3 per cent was given to the MSME sector and 235 engineering tariff lines till last fiscal ended March 31.

“We feel that this should be extended for FY15 at least in view of the above gap in cost of finance between our rates and international rates. We also feel that it should be extended to the entire engineering sector,” he said.

Engineering exports in 2013-14 aggregated $62 billion. The US alone accounted for about 15 per cent of the shipments.

The current budgetary allocation on this account is Rs 1,200 crore and an additional amount of Rs 500 crore will cover the entire sector, Shah said.

With regard to rupee export credit, the interest rate charged varies from bank to bank and is, at present, between 10.5 per cent and 11 per cent per annum. With 3 per cent interest subvention, this comes in the range of 7.5-8 per cent per annum.

“Thus, the interest subvention lowers the cost of credit considerably even though there is sufficient gap with one year libor rates,” he said.

Shah further said this is the right time to go for the push since the order book position from the US has considerably improved, which is likely to get reflected in the shipments in the coming months.

He added: “Now that exporters across different manufacturing lines are receiving orders due to an impressive revival of the US in the second quarter of the year, they must get working capital at competitive rates, so that their zeal for higher shipments become pronounced and maintained.

“Once enabled, there is no reason, engineering exports cannot exceed $70 billion and emerge among the top sectors in the export basket of the country.”