Non Compliance of 75 % Mandatory Guidelines causing Forex reserve Crisis

New Delhi: India’s foreign exchange reserves are likely to drop further.  As five major Exim projects worth    Rs. 10,000 Crore (USD 1.3 billion) funded by Indian Government for the development of Maldives infrastructure projects through Line of Credit in Maldives are controlled by very few vested Interest groups without following 75% Mandatory Guidelines.

All of these projects were awarded to large Indian EPC contractors.  As it is an EXIM bank project and according to the EXIM bank and Indian government guidelines, Indian EPC’s are required to adhere to the 75% Mandatory instructions which reiterates, from the total project value a bare minimum of 75% value of worth contracts (Materials & Services) must be sourced from India. With this above said clause, It is clearly evident that along with the infrastructure development of Maldives, even Indian Government wants to boost Indian exports through Sourcing the Products & Services from India which will lead in strengthening of its Forex reserves and in safeguarding the Indian Economy. This mandatory clause of 75% rule has to be read along with ‘Make in India’ Campaign.

Project amount of around 95% is for developing Concrete infrastructure wherein the major portion of materials required for these projects are largely Aggregates, Sands and Cements. These materials are readily available and can be easily sourced and supplied from India. Unfortunately, Due to the recent practice of ignoring this 75% prevailing rule by few vested interest groups/EPC’s, exports from India has been reduced drastically for quite some time.  Hence, rather than sourcing the materials or service from India, these EPC’s are relying on other Middle East Countries like Oman & UAE (Over 5 times longer way than India) for Export with same or even at higher rate than India and curtailing the forex reserve income to India and lately resulting a real threat to the Indian Economy.

Moreover, many Indian   MSME’s are well equipped to supply the materials with similar quality even at lesser price due to the benefit of the reduced distance and its ease of availability. Lack of Environmental Clearance Certificate issues highlighted falsely by these vested interest groups are just one of a few gimmicks without any realities.

During these tough economic times, it will be of a real relief for the Countries Forex reserve as well as MSME’s if the concerned authorities voluntarily intervenes and instruct the respective EPC’s to mandatorily adhere to the 75% strict rule whereby safeguarding Indian Economy. All EPC’s concerned should be bound to consider export from India where the Quality and pricing are at par with  other Middle east countries and also as all such projects are been funded and subsidized by Indian Exim Banks.