Against the backdrop of 25 basis points policy repo rate hike by the Reserve Bank of India (RBI), apex exporters body - Federation of Indian Export Organisations (FIEO) has raised concerns over higher borrowing costs leading to rise in financial burden on exporters, particularly MSMEs, at a time when global trade is facing heightened uncertainty.
FIEO President S C Ralhan has noted that geopolitical tensions, volatile energy prices, supply-chain disruptions, longer transit times and delays in payments are extending the export working-capital cycle and higher interest costs in such scenarios can adversely affect the competitiveness of Indian exporters, especially those operating on thin margins.
In order to weather through the global uncertainty, he has urged the RBI to provide greater flexibility in export finance by extending the period of pre-shipment and post-shipment export credit from the existing 270 days to 450 days because of longer shipping and transit periods, logistics disruptions and delayed realisation of export proceeds.
He added that such an extension would provide much-needed breathing space to exporters and enable them to honour their international commitments without facing undue financial stress. He further suggested that targeted liquidity support and adequate availability of affordable export credit should accompany the calibrated tightening stance.
