FIEO president Ramu S Deora said the slack season credit policy should be reviewed against the backdrop of a stable market achieved as a result of the steps taken by the RBI in January, 1998. "A reduction of export credit rates by three to four per cent is required to create an environment conducive to exports," he said.

Deora called for restoration of 100 per cent export credit refinancing, which had been cut to 50 per cent by the RBI to check speculative activity in the foreign exchange market.

Further, exporters should be allowed to keep up to 100 per cent of of their earnings in the export earnings foreign currency (EEFC) account as against 50-70 per cent at present, he said.

Referring to bank guarantees, Deora said it is an avoidable burden on the exporting community as itimposed an additional transaction cost of 9 to 15 per cent.

Bank guarantees charges vary from 1.5 per cent to three per cent per annum, he said. For capital goods, the exporter is required to give bank guarantee for three years and the project exporter even for four to five years. Deora urged the government to work towards reducing these transaction costs if exporters are to retain their competitive edge in the international market.

Stressing the importance of export oriented units (EoUs) and export promotion zones (EPZs), he said they should be provided facilities of working capital up to 75 per cent and the balance by way of packing credit.EoUs, which export more than 75 per cent of their production should be given a permanent tax holiday, he added.