FIEO Urges RBI for Liquidity Support as Freight Costs Surge Amid West Asia Disruptions
by Prashant Kapadia/NHN
New Delhi, April , 2026: The Federation of Indian Export Organisations (FIEO) has called on the Reserve Bank of India (RBI) to extend additional liquidity support to exporters, citing mounting working capital pressures due to sharp increases in freight costs and prolonged shipment timelines triggered by ongoing geopolitical disruptions in West Asia.
According to FIEO, logistical challenges have significantly escalated transportation costs, particularly for shipments to the Middle East, where freight rates have surged by as much as 300–400 per cent. The disruption has also spilled over into air cargo, further straining exporters.
Ajay Sahai, Director General and Chief Executive Officer, FIEO, noted that delays in shipping have materially impacted payment cycles and liquidity. “Earlier, shipments to the US would reach in around 50 days; now, they are taking up to 90 days. Consequently, payment cycles have stretched from 30–60 days to 90–120 days, increasing the working capital requirements for exporters,” he said.
Highlighting the need for immediate intervention, Sahai added that exporters require enhanced access to affordable credit. “We are requesting the central bank to provide liquidity support. The cost of credit remains a concern, and we expect the government to remove the existing cap on interest subvention, which is currently inadequate,” he stated.
FIEO has also urged the government to revisit the structure of the interest subvention scheme, arguing that the current framework — which offers limited support with restrictive caps — does not sufficiently offset rising borrowing costs amid global trade volatility.
The appeal comes even as the RBI has extended key trade facilitation measures introduced in November 2025. Exporters continue to benefit from an extended timeline of 15 months for realisation and repatriation of export proceeds, compared to the earlier nine months. Additionally, the enhanced export credit period of 450 days for pre- and post-shipment credit has been extended for disbursals until June 30, 2026.
On the trade front, Sahai highlighted India’s evolving free trade agreement (FTA) strategy, which is increasingly focused on key and complementary markets. Following agreements with the UAE and Australia, progress has been made with the European Free Trade Association (EFTA) bloc — comprising Switzerland, Norway, Liechtenstein, and Iceland — which has committed to investing $100 billion in India over the next decade.
India has also advanced FTA negotiations with countries including the United Kingdom, Oman, New Zealand, and the European Union, with the Oman agreement expected to come into force from June 1. Talks are ongoing with several other economies, including the United States, Qatar, the Gulf Cooperation Council (GCC), Peru, Chile, Canada, Israel, and the Eurasian Economic Union (EAEU).
Separately, Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India, observed that India’s export sector has demonstrated resilience despite a challenging global environment marked by geopolitical tensions, tariff fluctuations, and supply chain disruptions.
“It does not appear as though there was any major disruption last year, as exports of goods and services have continued to expand,” Ghosh said, while cautioning that ongoing instability in West Asia could pose fresh risks to trade and growth.
He added that the financial sector remains stable, with banks and non-banking financial companies (NBFCs) maintaining strong balance sheets and manageable asset quality risks. Ghosh also noted a recent uptick in remittances from West Asia, though he warned that sustained regional slowdown could impact inflows going forward.