EEPC India, an exports promotion agency for engineering goods, has urged the RBI to provide a better credit terms for this crucial sector, which is facing headwinds of the recent fall in European currency euro.

This export promotion body has written to the Reserve Bank of India (RBI) suggesting that funds be made available to this sector at "repo rate plus one percentage point" in rupee terms so as to improve the competitiveness of engineering goods, its Chairman Anupam Shah said.

"This (export credit at repo plus one percentage point) is needed if you want us to be competitive. Make in India will happen only if we are competitive", Shah told Business Line .

Providing rupee funding at this rate is eminently doable for the Indian banking system especially when they have an additional comfort of ECGC cover for Indian export consignments, he said.

Engineering exports from the country have been a picture a worry, especially in recent months despite the US economy looking up.

Shah, who is pinning his hopes on the new foreign trade policy to be announced on Wednesday, said that the fall in euro will definitely impact engineering goods exports to the European Union.

"It is however very difficult to say what percentage will be affected", he said.

Of the nearly $ 70 billion engineering goods exports from the country, the European Union will roughly account for as much as $ 11-12 billion this fiscal, according to Shah.

Hopes belied

Shah said the average cost of rupee funding that is available in India for engineering goods sector is between 11.5-13 per cent, which was above the base rate of most banks.

"When the base rate system was introduced, we were told that this concept would ensure lowering of cost of funds for the export sector in due course. However, that has not happened so far", he said.

Other requests

EEPC India has also urged the RBI to restore the export credit refinance facility that was withdrawn on February 6 this year. Also, export credit should be counted as priority sector advances for the banks, EEPC India has said.

srivats.kr@thehindu.co.in

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