EEPC India seeks RBI's help to cut cost; to stay afloat in tension-ridden global trade
New Delhi, May 9 (KNN) With US-China trade tensions leaving the global financial markets and trade in a state of anxiety, it’s the time when Indian exporters are enabled to stay competitive by the Reserve Bank of India (RBI) which should facilitate an easy and less expensive bank loans, more so for the MSME exporters, the engineering exporters' apex body, EEPC India has said.
EEPC India Chairman Ravi Sehgal said,"We are in the midst very anxious global economic environment marked by ever-rising US-China trade tensions, instability in the crude oil prices which tend to leave forex market highly volatile.
In this trading landscape, the Indian exporters, particularly the small enterprises in the engineering sector, are facing severe cost and other challenges. We have made a comprehensive presentation to the RBI for carving out an exporter-friendly interest rate structure and expect the central bank to advise banks accordingly and notify the changes, where required, he added.
The Interest Equalisation Scheme for the exporters become horizontal in nature by covering the entire MSME sector, so that the linkage with exports goes away and does not fall foul of the WTO’s norms as well, suggested by EEPC India to the RBI.
At present, the scheme is for Rupee Export Credit with two variants. A 5% interest equalization is for the MSME Rupee export credit while there is a 3% interest equalization for 416 tariff lines and Merchant Exporters who export items falling under these specific tariff lines. However, as the Interest Equalization Scheme is export specific, it is WTO non-compliant and should accordingly be re-aligned.
In its presentation to the RBI, the EEPC India also suggested that the banks should not ask for external credit rating as they are doing internal rating and banks be advised not to charge loan application processing and credit Limit renewal fee.
Besides, when export bills are purchased/discounted under ECGC policy, in case of non- realisation on the due date, banks should not recover the money by debiting the exporter’s account. Rather they should wait for payment beyond due date otherwise they should wait for claim to be settled by ECGC. RBI should ask banks not to insist for discounting of Usance Export Bills.
The EEPC India added, Availability of bank guarantee at minimum margins and bank charges as also financial support to buy land for expansion is absolutely imperative for the flouring of the MSME sector.