Exporters, industry bodies knock on RBI's door for US tariff buffer

Exporters and industry bodies sought RBI relief including moratoriums, relaxed NPA norms, and REER settlements to counter the impact of 50 per cent tariffs by the US

Major export organisations and industry associations met Reserve Bank of India (RBI) Governor Sanjay Malhotra on Thursday and sought several relaxations to mitigate the adverse impact of the 50 per cent tariff imposed by the US on a 

majority of Indian products. 

Their demands included a  one-year moratorium on loan  repayments, a collateral-free credit scheme, relaxation of non performing asset (NPA) norms, and  extensions on due dates without penalties.

 

During the two-hour meeting in Mumbai, the industry bodies and exporters also proposed that the central bank allow settlement of exports at the real effective exchange rate (REER), instead of the normal exchange rate by converting the US dollar into rupees. Additionally, they urged the RBI to let the domestic currency depreciate freely so that exporters could recoup some of the losses they will incur due to the tariffs imposed by the Trump administration. 

Apart from US export-specific challenges, exporters sought additional support from Indian banks through increased lending to the sector by creating a sub-category under priority sector lending (PSL) norms. Although exports are part of PSL, bank funding to the sector remains muted, participants said. They also flagged concerns over the high cost of credit, unfair trade practices by rating agencies, and classification norms for MSMEs in relation to NPAs. 

“The demand from exporters is twofold: addressing the 50 per cent tariffs and critical banking issues of exporters,” said Ajai Sahai, director general and chief executive officer, Federation of Indian Expert Organization. 

Sahai said that despite exports accounting for over 20 per cent of India’s GDP, credit to exporters remains subdued, and greater support from banks is essential.

 

Engineering Export Promotion Council of India (EEPC) Chairman Pankaj Chadha said the council has urged the RBI to introduce an interest subvention scheme for MSMEs to help them remain competitive globally. 

“Indian exporters are facing a significant disadvantage, as our tariffs are 30 per cent higher than those of global competitors. We have urged the government to bridge at least half the gap (15 per cent). We have requested the RBI to allow exports to be settled at the REER rate, which is currently at 102, instead of the prevailing market rate of ₹88 per US dollar,” Chadha said, adding that the difference could be compensated through RBI support. 

The PHD Chamber of Commerce and Industry (PHDCCI) also urged the RBI to increase the flow of credit to MSMEs. While the Union Budget for FY25 introduced a credit guarantee cover for MSMEs, banks continue to insist on collateral securities in addition to the guarantee. The industry lobby group sought the RBI’s intervention to ensure stricter implementation of credit guarantee schemes. 

Last week, exporters and industry representatives met Finance Minister Nirmala Sitharaman and Commerce and Industry Minister Piyush Goyal to discuss the rising global tariffs, explore solutions, and chart a path forward amid shifting trade dynamics. 

Sitharaman has said the government is preparing a comprehensive package to support Indian exporters impacted by the tariffs imposed by the Trump administration. 

 

However, RBI officials present at Thursday’s meeting only listened to stakeholders’ concerns and refrained from committing to any specific action, according to two participants.

 

Last month, the RBI governor had said the central bank would step in if the 50 per cent tariffs affected domestic economic growth. “We have provided ample liquidity to the banking sector and whatever else is required to support the growth of the economy, including those sectors which are impacted more. If it happens, we will not be found wanting in our job,” he had said at an event.

 

Apart from FIEO, EEPC, and PHDCCI, the meeting with top RBI officials was attended by the Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, Associated Chambers of Commerce and Industry of India, Maharashtra Chamber of Commerce, Industry & Agriculture, and the All India Association of Industries. 

Key industry demands

• One-year moratorium on loan repayments
• Collateral-free credit scheme
• Relaxation of NPA norms
• Extensions on due dates without penalties
• Settlement of exports at real effective exchange rate