Amid sustained contraction in outbound shipments of goods, exporters have urged the government to give a push to the rupee trade mechanism.
The matter was discussed at the Centre’s review of sectoral progress in exports with the export promotion councils on Tuesday, people aware of the matter told Business Standard.
The Special Rupee Vostro Account (SRVA) mechanism, which was announced by the Reserve Bank of India (RBI) over a year ago, has not taken off. Exporters said this was because both sides — India and its export partner — were not keen to test the new arrangement.
“Besides, currencies not having direct exchange rate are subject to cross currency exchange rate twice which takes away 3 – 4 per cent of the aggregate amount. The conversion cost should be borne by the bank or government so that trade is encouraged to go for SRVA to push our exports,” the Federation of Indian Export Organisations (FIEO) informed the commerce department during the review meeting.
Merchandise exports contracted for a sixth consecutive month in July, by 15.9 per cent to $32.25 billion, as external demand continued to remain sluggish due to the geopolitical situation and high inflation.
“There hasn’t been much decline in the volume of exports, but value wise, there has been a contraction due to softening of commodity prices. This was discussed in the meeting with the minister,” one of the people cited above said.
Some sectors, such as engineering goods and pharmaceuticals, are seeing some improvement in demand. “Over the past 10-15 days, there has been an uptick in textiles exports orders as well,” the person said.