In this trading landscape, Indian exporters, particularly the small enterprises in the engineering sector, are "facing severe cost and other challenges", he said.
"We have made a comprehensive presentation to the RBI for carving out an exporter-friendly interest rate structure and expect the central bank to advise banks accordingly and notify the changes, where required," Sehgal said.
The engineering exporters' apex body suggested to the Reserve Bank of India (RBI) that the "Interest Equalisation Scheme" for the exporters should become horizontal in nature by covering the entire MSME sector, so that the linkage with exports goes away and complies with the World Trade Organisation's (WTO) norms as well.
"At present, the scheme is for Rupee Export Credit with two variants. A five per cent interest equalisation is for the MSME rupee export credit while there is a three per cent interest equalisation for 416 tariff lines and merchant exporters who export items falling under these specific tariff lines," EEPC India said in a statement.
However, as the scheme is export specific, it is "WTO non-compliant and should accordingly be re-aligned", it said.
In its presentation to the apex bank, the exporters' body also suggested that the banks should not ask for external credit rating as they are doing internal rating and banks should be advised not to charge loan application processing and credit limit renewal fee.
Besides, when export bills are purchased or discounted under ECGC policy, in case of non-realisation on the due date, banks should not recover the money by debiting the exporter's account, it said.