MSMEs in labour intensive sector reflects modest growth due to stricter lending norms, protectionism: FIEO

New Delhi, June 29 (KNN) Exports data for the second month of the fiscal though have shown a robust growth but MSME units particularly in labor-intensive sectors such as gems & jewellery, leather & leather products, textiles, jute manufacturing, handicrafts, agricultural products etc. are either showing very modest growth or are into negative zone, said Federation of Indian Export Organization (FIEO) President Ganesh Kumar Gupta.

Expressing concern over the dismal growth of MSME exports, Gupta said these sectors are still facing financial crunch due to stricter lending norms followed by banks and lending agencies which leads to sharp reduction in export credit and in turn affected MSME exports.

Gupta, however said that a lot of cushioning this time around has been provided by the petroleum sector to exports, as it not only outperformed but had an over impressive growth of about 105%.

The FIEO Chief once again expressed his concern on the rising trade deficit, primarily on account of swelling of crude imports bill due to rising global oil prices, which would further add to inflationary conditions and also on the current account deficit front.

According to official figures, 23 out of 30 major product groups were in positive territory during May, 2018.

Besides petroleum, engineering, organic & inorganic chemicals, drugs & pharmaceuticals, cotton yarn/fabs/made-ups, electronic goods and plastic & linoleum etc. have also shown positive exports growth during the month.

Highlighting the issues responsible for creating troubles for the sector, Gupta pointed that the
domestic issues including access to credit, cost of credit especially for MSMEs should be seriously looked into as global challenges and increasing protectionism.

He said, “Uncertainties in exports due to increasing protectionism and sanctions on Iran and Russia is adding to our woes.”

He requested the government to explore the possibility of trade in Indian rupees with the two countries.