Following the imposition of a 50% tariff by the United States on Indian exports, major export organizations have requested relief, loan moratoriums, and increased lending in the priority sector from the RBI. Exporters seek relaxation in loan due dates and enhanced banking support to mitigate the impact of the US tariffs.
U.S. Tariff: India's leading exporter organizations met with senior officials of the RBI today to seek relief after the United States imposed a 50% tariff on Indian exports. Exporters urged for a moratorium on loan payments, relaxation in NPA norms, and an increase in lending to the priority sector. Institutions such as FIEO, CII, FICCI, ASSOCHAM, and the Maharashtra Chamber of Commerce were present at the meeting. Finance Minister Nirmala Sitharaman stated that the government is preparing a comprehensive package to support exporters.
Key Demands of Exporters
Exporters have requested the RBI to provide a moratorium on loan payments. Additionally, they have requested leniency in Non-Performing Asset (NPA) rules and extension of payment due dates without penalty. Export organizations also desire the creation of a sub-category within the priority lending sector to make more credit available to exporters.
Ajay Sahai, Director General and CEO of FIEO, explained that exporters are primarily seeking two things: first, relief from the impact of US tariffs, and second, resolution of banking-related issues. He stated that a one-year moratorium on loan payments and relaxation of NPA norms are crucial for companies exporting to the US market.
Need for Reforms in the Priority Lending Sector
Exporters have urged the RBI to increase credit availability to the export sector by creating a sub-category under the priority lending sector. Exports contribute over 20% to the country's Gross Domestic Product (GDP), but the allocation of banking credit for exporters is insufficient. Consequently, exporters are seeking more assistance from banks.
Pankaj Chadha, Chairman of the Indian Engineering Export Promotion Council, mentioned that the council has requested an interest subvention scheme for MSMEs from the central bank. The objective is to ensure the sustainability of small and medium-sized exporters in global competition.
Other Issues Raised in the Meeting
The meeting included representatives from FIEO, CII, FICCI, ASSOCHAM, Maharashtra Chamber of Commerce and Industry & Agriculture, among others. During the discussions, concerns were also raised that the current exchange rate is not benefiting exporters. Although the rupee has weakened against the dollar, there has also been a decline in other currencies, meaning exporters are not realizing any significant gains.
Furthermore, the current geopolitical situation is proving challenging for exporters. Global market volatility, supply chain disruptions, and US tariffs have exacerbated the strain on exporting companies.
Support from RBI and Government
The RBI listened to the exporters' concerns seriously but has not yet committed to any specific action. Last month, RBI Governor Sanjay Malhotra had stated that the central bank could take necessary measures if the growth of the domestic economy is affected due to US tariffs.
Meanwhile, Finance Minister Nirmala Sitharaman announced that the government is preparing a comprehensive package to support Indian exporters. This package may include financial relief, banking support, and other necessary measures.
What Export Organizations Want
Export organizations seek immediate reforms in the banking system to mitigate the impact of US tariffs. These include facilities such as loan moratoriums, relaxation in NPA norms, and increased lending in the priority sector. Export organizations also wish for the RBI to refrain from any intervention in the rupee exchange rate, so that the weakness against the dollar provides some relief.
