AEPC Chairman Urges RBI Governor to Introduce Separate Export Policy for MSMEs

Dr. A Sakthivel, Chairman of Apparel Export Promotion Council (AEPC), met Shri Sanjay Malhotra, Governor of the Reserve Bank of India (RBI), in Mumbai and requested a separate export policy for the MSMEs sector. He proposed the introduction of a dedicated Special Interest Package Scheme to address lending inconsistencies and high borrowing costs.

Dr. A Sakthivel, Chairman of AEPC, met RBI Governor Shri Sanjay Malhotra in Mumbai on 16th February 2026 and submitted a representation seeking a distinct export policy framework for MSMEs. He proposed that a Special Interest Package Scheme be introduced exclusively for MSMEs, noting that current lending rates are determined by individual bank policies and balance sheet positions, resulting in variations and elevated costs.

The meeting gained significance in the context of India signing Free Trade Agreements with 37 countries, with the coming decade expected to benefit the apparel and textile sectors. Dr. Sakthivel stated, “A large number of apparel exporters across India — predominantly MSMEs — face several operational and regulatory difficulties, particularly in their interactions with Authorised Dealer (AD) Banks, export finance systems, and compliance frameworks.” He highlighted challenges such as high interest rates on MSME loans affecting competitiveness, lending rates linked to CIBIL scores disadvantaging small and first-time exporters, high turnaround time for processing and sanctioning loans impacting working capital cycles, limited digitalisation of lending processes causing procedural delays and lack of transparency, among others.

As part of his proposal, Dr. Sakthivel said, “A dedicated Special Interest Package Scheme should be introduced for MSMEs. Currently, banks determine lending rates based on their internal policies and balance sheet considerations, leading to inconsistencies and higher borrowing costs. In this regard, the RBI may kindly consider issuing appropriate regulatory guidelines to ensure fair, transparent, and uniform lending practices for MSMEs, thereby improving credit accessibility and supporting sustainable sectoral growth with end-to-end digital loan processing and real-time tracking.”

He further requested measures to ease export finance constraints, including increasing the Interest Equalisation Scheme from the existing 2.75% to 5% for manufacturing exporters and removing the cap of Rs.50 Lakhs, with the eligible limit enhanced in a graded manner based on turnover or export performance.

Additional suggestions submitted by the AEPC Chairman included:
• External credit ratings to be mandatory only for MSME units with total banking exposure above ₹100 crores.
• Replacement of Credit Information Reports (CIRs) with CRILC (Central Repository of Information on Large Credits) reports for regulatory and monitoring purposes, where applicable.
• Waiver or significant reduction of processing charges on renewal of existing bank limits where there is no enhancement or restructuring, applicable only to the enhanced portion of limits.
• Implementation of a standardised structure across banks, with RBI regulating forex conversion and general bank service charges to ensure transparency and uniformity.
• Rationalisation of risk coverage for pre-shipment packing credit facilities, as exporters already obtain post-shipment risk cover through active buyer policies from the Export Credit Guarantee Corporation of India, while banks separately secure coverage and pass premium costs to exporters.
• Integration of foreign bank charges data from the RBI-EDPMS system with the Customs ICEGATE system to prevent unnecessary short realisation notices.

Dr. Sakthivel stated that MSME exporters are a key contributor to India’s export growth and employment generation but are affected by procedural delays, banking constraints, and regulatory complexities that impact efficiency and competitiveness. He added that MSMEs contribute nearly 30% to GDP, 45% to exports, and provide employment to over 11 Crore people, while continuing structural, financial, and procedural issues are affecting their export performance.