FIEO Seek RBI Intervention; Exporters Facing Challenges from High Tariffs, Input Cost Inflation

Exporters' body FIEO on Thursday sought immediate intervention of the Reserve Bank, citing multiple challenges faced by the export sector, including rising tariffs, input cost inflation, demand volatility, and stressed that banks must act not just as financial enablers but as long-term partners in export sustainability.

In a meeting with the RBI, the Federation of Indian Export Organisation (FIEO) suggested that banks should offer flexible credit solutions, timely restructuring of credit, and advisory support to help exporters maintain their operations and global commitments.

"Exporters are currently battling compounded challenges, including rising tariffs, input cost inflation, and demand volatility. In such times, banks must step in not just as financial enablers but as long-term partners in export sustainability. We request RBI's guidance to ensure banks adopt a proactive and compassionate posture," it has told the Reserve Bank.

Due to disruptions in international supply chains, exporters are facing delays in procurement, production, and shipment schedules.

"To ensure continuity of operations, we request an extension in the pre-shipment credit period. This will help exporters manage their working capital effectively, meet quality standards, and uphold contractual obligations without being financially strained due to delays outside their control," the federation suggested.

It has also asked for a one-time moratorium of 12 months on both principal and interest repayments would be immensely beneficial.

"This breathing space will allow exporters to recalibrate operations, recover receivables, and reorient their strategies to adapt to new market realities. Such a measure could play a pivotal role in avoiding defaults and ensuring the long-term financial health of export-oriented businesses," an exporter said.

The FIEO has recommended that as the Emergency Credit Line Guarantee Scheme (ECLGS) has proved vital during the pandemic, a similar government-backed, collateral-free credit scheme, tailored for exporters, specially SMEs, is the need of the hour.

"It will significantly improve access to finance. It will foster market diversification, encourage innovation, and enhance global competitiveness amid emerging tariff regimes," the exporter added.

To deal with the delayed payments from foreign buyers and customs-related bottlenecks, it has asked for an extension of the remittance period for general merchandise exports from 9 months to 12 months, and for gold jewellery exports, 180 days.

Further, it has stated that despite healthy export growth, over 15 per cent in rupee terms between 2021-22 and 2023-24, net outstanding export credit declined by more than 5 per cent between March 2022 and March 2024.

Although export credit is classified under priority sector lending, the actual flow remains inadequate.

FIEO has therefore proposed earmarking a dedicated sub-target of 2-2.5 per cent within the overall 40 per cent priority sector lending target exclusively for export credit.

It added that "we have observed persistent inconsistencies in shipping bill realisation data across platforms - EDPMS, DGFT (ICEGATE), and banks" and due to that often, exporters are wrongly issued Show Cause Notices (SCNs) or asked to refund drawbacks due to such mismatches.

"We request RBI to issue an administrative instruction designating EDPMS (Export Data Processing and Monitoring System) as the authoritative source for realisation monitoring. Any discrepancy with other databases should be resolved in favour of the EDPMS record, sparing exporters from avoidable compliance burdens and financial repercussions," it added.