The 25 basis points increase in the interest rates by the Reserve Bank of India on Wednesday is a big negative for exporters, as they would become less competitive in a tough global market that is already facing the threat of tariff war, said EEPC India Chairman Ravi Sehgal.
“While the RBI Governor Dr 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,” Mr Sehgal said.
He said, in fact, the cost of borrowing is adding to overall cost of production for exporters, particularly in the engineering sector, due to rising prices of raw material like steel.
Mr Sehgal said if the GDP growth has to be pushed up to the levels as estimated by the RBI, the exporters need to be supported, like their competitors are in countries like China.