Exempt exporters from proposed base rate model, FM urged

The Tirupur Exporters' Association (TEA) today urged finance minister Pranab Mukherjee to ensure that exporters are exempted from the proposed base rate system, so they can get export credit at a concessional rate of 7 per cent.

In a letter to Mukherjee, TEA president A Shaktivel expressed concern that the credit for export was still higher than the international benchmark despite the concessional interest rate facility, reducing competitiveness in the global market.

Shaktivel, also the president of the Federation of Indian Exporters Organisations, said that the RBI had proposed to implement the base rate model from July 1, replacing the current Benchmark Prime Lending Rate (BPLR).

Once this was done, the actual lending rate charged would be the base rate, plus other specific charges. This would make the interest rate costlier for exporters as the concessional export credit facility available (BPLR–2.5%) under the BPLR system would be withdrawn, he said.
    
In view of this, exporters want exemption from the proposed system, besides provision of export credit at a concessional rate of 7 per cent, Shaktivel said.