The Federation of Indian Export Organisations (FIEO) has appealed to the government and Reserve Bank of India to introduce “Export Refinance Scheme” to insulate export credit from the hike in interest rates.
A. Sakthivel, president of FIEO, said in a press release on Friday that with increasing global competition coupled with slowdown, it is necessary to ensure that increase in export credit rates does not blunt the competitive edge of exporters.
The increase in repo rate is on expected lines to contain rising inflation and flight of capital.
However, global trade is passing through a difficult phase because of rising inflation. The RBI should extend “Export Refinance Facility” to banks. The government should increase interest subvention under the Interest Equalisation Scheme from 3% and 2% respectively to 5% (to all MSME manufacturers) and 3% (to all other eligible categories) as interest rates have already crossed the pre-Covid level when the Scheme provided for 5% and 3% for subvention, he added/
The FIEO urged exporters to opt for foreign currency denominated credit which is available at LIBOR+150-200 basis points.