India's exports, already facing a slump, are feared to be even less competitive in the global market after the Reserve Bank decided to hike policy interest rates on Wednesday.
A day after the move, exporters said the 25 basis points increase in the interest rates is a big negative for them and they would bear the brunt in a tough global market that is already facing the threat of tariff war.
Country's premier engineering export promotion body, EEPC India Chairman Ravi Sehgal Thursday demanded a similar protection for exporters in India which China was currently allowing its traders.
He said that while on one hand, RBI Governor Urjit Patel talked of escalating protectionism turning into a currency war, on the other hand, he made India's exports costlier by raising repo rate.
"While the RBI Governor Urjit Patel has himself pointed towards increased global risks including the trade war and widening trade deficit, making higher export growth imperative, the rate of borrowing has been moving up. That is certainly not a good news for exporters," Sehgal said.
He said, in fact, the cost of borrowing is adding to the overall cost of production for exporters, particularly in the engineering sector, due to rising prices of raw material like steel.
Exporters have been also hit by late GST refunds which has eroded their working capital.
(Published 02 August 2018, 05:05 IST)
JOIN US