After the Reserve Bank of India (RBI) hiked its repo rate by 25 basis points to 6.25% to combat inflationary pressures arising from higher international oil prices, Chairman of the EEPC India, Ravi Sehgal has said that the decision of interest rate hike would increase input cost pressures only for the exporters.
Sehgal pointed that the note of various headwinds being faced by the Indian exporters has been taken by the central bank itself but the remedy is not forthcoming and further termed this situation as the paradox for exporters. Besides, he noted that raising interest rate would also add to the cost of engineering exporters, most of which are in the SME segments, adding that in any case, they were reeling under the increase in steel prices and also pending refunds of the Goods and Services Tax (GST) hit their liquidity.
The Reserve Bank of India (RBI), in its second bi-monthly monetary policy review of 2018-19, has raised the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points (bps) to 6.25%, the first increase since January 2014. The reverse repo rate under the LAF also increased to 6.0%.
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