New Delhi, Oct 7 — The Reserve Bank of India’s decision to raise the policy repo rate and shift to calibrated‑tightening stance is understandable amid rising inflationary pressures and sought extension of export credit period to 450 days, an industry chamber said on Wednesday.
The Federation of Indian Export Organisations said that higher borrowing costs from repo hike risks increasing the financial burden on exporters, particularly MSMEs.
It stressed that amidst strong GDP growth and exports, it should be ensured monetary tightening does constrain the working capital availability of export-oriented businesses, particularly MSMEs.
“Exporters are currently operating in an exceptionally uncertain global environment. Geopolitical tensions, volatile energy prices, supply-chain disruptions, longer transit times and delays in payments are extending the export working-capital cycle. Higher interest costs in such circumstances can adversely affect the competitiveness of Indian exporters, especially those operating on thin margins," said FIEO President S C Ralhan.
Ralhan 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.
The extension would provide much-needed breathing space to exporters and enable them to honour their international commitments without facing undue financial stress.
FIEO further suggested that targeted liquidity support and adequate availability of affordable export credit should accompany the calibrated tightening stance. This would help exporters absorb elevated input and financing costs while maintaining production, fulfilling overseas orders and exploring new markets.
The Indian economy has demonstrated considerable resilience, with GDP growth at 7.8 per cent in Q1 FY27 and merchandise as well as services exports maintaining strong momentum.