EEPC India Seeks RBI Help to Cut Cost to Stay Afloat in Tension-Ridden Global Trade

EEPC India, the apex body of the engineering exporters, is lobbying hard with the Reserve Bank of India (RBI) to make the interest equalisation scheme (IES) for the exporters 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 either. The apex bank should facilitate easy and less expensive bank loans, especially for the MSME exporters, thereby enabling Indian exporters to stay competitive in the wake of the US-China trade tensions, which have already left the global financial markets and trade in a state of anxiety and uncertainty, a top official of the EEPC India said.

Interestingly, at present, the IES scheme is for Rupee Export Credit with two variants: a 5 percent interest equalization is for the MSME Rupee export credit while there is a 3 percent 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.

Ravi Sehgal, chairman, EEPC India, said that they 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 new trading landscape, exporters from India, particularly the small enterprises in the engineering sector, are facing the severe cost and other challenges. They 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 said.

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 the internal rating. and banks be advised not to charge loan application processing and credit Limit renewal fee, he said.

EEPC India also demanded that 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. They should, rather, wait for payment beyond due date otherwise they should wait for the claim to be settled by the ECGC. RBI should also ask banks not to insist for discounting of Usance Export Bills.

EEPC India also feels that 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, said its chairman.