The Federation of Indian Export Organisations (FIEO), representing apex exporters, has called on the Reserve Bank of India (RBI) to make public the details of banks that provide the Special Rupee Vostro Accounts (SRVA) for trade settlements. FIEO President S C Ralhan emphasized that a lack of awareness is hindering the adoption of this system among exporters.
The SRVA system is designed to simplify trade processes and conserve foreign exchange. However, many exporters remain unaware of how to access this facility, Ralhan explained to PTI. In 2023, the RBI authorized banks in India to establish SRVAs with partner banks from select nations, aiming to enhance bilateral trade in local currencies.
This initiative allows exporters and importers to conduct transactions in their own domestic currencies, fostering the growth of a bilateral foreign exchange market. Ralhan noted that while this system facilitates trading with certain countries in rupees rather than dollars or euros, many exporters lack knowledge about which banks offer this service. He urged the RBI to make this information publicly available, stating that increased awareness could lead to better utilization of this beneficial initiative.
During a meeting with RBI Governor Sanjay Malhotra in Mumbai last week, Ralhan also discussed other pressing issues. He pointed out that while banks may approve loans for exporters, only about 35-40% of these funds are actually utilized.
“The process to access these funds is often complex, slow, or unclear. It’s akin to being granted a loan but facing numerous obstacles that lead one to abandon the effort. We must address this so that exporters can effectively use the funds available to them,” Ralhan remarked, representing exporters from Ludhiana.
Regarding high interest rates, he expressed concern that Indian exporters, especially small and medium-sized enterprises, are at a disadvantage compared to foreign businesses. He highlighted that borrowing costs have escalated, particularly as buyers are stretching payment periods due to liquidity issues. Many countries provide their exporters with lower loan rates or subsidies, giving them a competitive edge.
In India, without support mechanisms like interest equalization—which could make loans more affordable—domestic exporters struggle to compete on pricing with their global counterparts. The high cost of borrowing leads to increased product prices, making them less appealing in international markets.
Ralhan advocated for the immediate implementation of the Interest Equalisation Scheme by the RBI. He also noted that while the country’s exports are on the rise, the credit support needed by exporters is not keeping pace. “The RBI governor responded positively to our concerns and assured us he would consider all of the issues raised,” Ralhan shared.
India’s exports showed a positive trend after four months, with a slight increase of 0.7% to reach $41.97 billion in March. Overall, exports of goods and services reached a record high of $824.9 billion in the last fiscal year, despite challenges posed by global economic conditions. Cumulatively, from April to March in the fiscal year 2024-25, the country’s exports rose by 0.08% to $437.42 billion, with services shipments achieving an all-time high of $387.5 billion during this period.
