Only 11% of FY’23 export credit targets met

AHMEDABAD: Gujarat witnessed a significant decline in export orders across key manufacturing sectors, leading to a failure in meeting the export credit targets set by banks under the Service Area Credit Plan (SACP) for the fiscal year 2022-23.
According to the State Level Bankers’ Committee (SLBC) Gujarat report, export credit targets were achieved at a mere 11% of the intended amount during FY 2023. Out of the targeted Rs 2,356 crore, only Rs 272 crore was disbursed throughout the year.
In terms of the number of accounts, the achievement in disbursals was less than 1%, with only 112 accounts receiving funds against the targeted 23,810 accounts.
The decline in exports within sectors such as gems and jewellery, textiles, chemicals, and engineering goods is believed to be the primary reason behind this underperformance.
Pathik Patwari, president of the Gujarat Chamber of Commerce & Industry (GCCI), explains, “The lack of demand is a significant concern across sectors, especially in key markets like the US and Europe. With reduced orders and export volumes, the demand for export credit has significantly decreased.”
Industrialists also pointed out that banks’ lengthy processing time for letters of credit related to export orders has contributed to the decline in export credit. Additionally, banks’ reluctance to provide credit for exports to certain countries has impacted the situation.
“Bangladesh and Sri Lanka, crucial export markets for Indian textile players, are major garment manufacturing hubs for Europe and US. However, due to low demand from Europe and the US, raw material imports from India to the two markets declined significantly.
Moreover, both the countries are experiencing economic upheaval. The financial instability in these countries has made banks cautious about extending credit for exports,” adds Patwari.
Several key manufacturing sectors, including dyes, intermediates and chemicals, leather, Active Pharmaceutical Ingredients (APIs), engineering, and plastics, have witnessed a drop in exports.
The combination of these factors has posed challenges for achieving the export credit targets in Gujarat.