Interest rates hurting Indian seafood exports

India’s hike in interest rates on export credits is negatively impacting seafood exports, according to the Seafood Exporters Association of India (SEAI).

“During the fiscal year, the sector has shown a comfortable growth rate both in rupee and U.S. dollar terms. However, the hike in the cost of export credit is not only going to dampen further growth, but is also likely to lead to dwindling of export figures,” the SEAI told SeafoodSource.

The interest rate of export credit was 9 percent in April 2010 and has since risen to nearly 11.25 percent. The cost of export credit has also jumped from 7 percent in July 2010 to 11.25 percent for the State Bank of India and 11.5 percent for other banks.

India’s interest rates on exports must decrease in order for the seafood industry, which represents about 2 million individuals, to compete in the global marketplace.

“As we are competing in the international market with most of the Asian producers who are enjoying a much lower rate, our suggestion to RBI [Reserve Bank of India] is to fix the rupee credit for export at 7 percent and the dollar credit to be made available at LIBOR+1 percent,” said SEAI.

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