FIEO demands revival package for export sector from RBI

MUMBAI: The Federation of Indian Exports Organisation today asked the Reserve Bank to come out with a revival package for the sector in the credit policy scheduled on April 29.

High cost of credit and absence of tax benefits have hit the sector hard, particularly small and medium enterprises (SMEs), FIEO President Ganesh Kumar Gupta said emphasising that the apex bank should consider sops for exports whose growth has been affected.

In a consultation meeting with the apex bank ahead of the Annual Monetary Policy for 2008-09, Gupta said high cost of credit and withdrawal of Duty Entitlement Pass Book benefits on 40-50 items has severely impacted the micro, small and medium enterprises.

"RBI may consider a revival package for sustenance at this critical juncture," he said.

FIEO said the MSME sector, unlike corporates which can raise funds at low cost through External Commercial Borrowings, has to obtain financing from public sector banks, which follow stringent norms.

"RBI may issue directives for review of MSME exposure guidelines for liberal export finance without the need to pledge collaterals etc," he suggested.

The organisation has highlighted the need for a currency derivative exchange with suitable regulatory framework looking at the losses suffered by the sector due to hedging strategy falling through.

"A regulatory framework needs to be evolved such as a currency derivative exchange for the SME sector, which is more vulnerable," it said.