Business EconomyPosted at: Dec 5 2025 2:39PM


EEPC India applauds timely policy support for export sector

New Delhi, Dec 5 (UNI) Pankaj Chadha of Engineering Export Promotion Council India (EEPC India) welcomed the Reserve Bank of India’s (RBI) move to cut the policy repo rate by 25 basis points to 5.25%, calling it “in line with expectations.”
In addition to the rate cut, the central bank announced open market operations (OMO) purchases worth Rs 1 lakh crore and a three-year USD/INR buy/sell swap auction of USD 5 billion to further infuse liquidity into the banking system.
“This is a welcome step that is expected to lift business sentiment, including in the engineering goods sector,” Chadha said. “The rate cut will reduce borrowing costs and provide a further boost to economic growth.” Chadha highlighted the challenges facing engineering exporters, who have been severely affected by the 50% tariff imposed by the US.
“Engineering goods exports fell nearly 17% in October, with shipments to the US accounting for a major part of the decline. Exports to other key markets also saw significant drops,” he noted. He added, “We deeply appreciate the timely policy measures taken by both the government and the RBI to support the exporting community. We also hope the recently announced Rs 25,000 crore Export Promotion Mission (EPM) is implemented promptly.”
Chadha emphasized the importance of measures to offset the punitive US tariff and the need for affordable export finance to help Indian engineering firms maintain their global market share.
The RBI’s Monetary Policy Committee (MPC) unanimously decided to reduce the repo rate to 5.25% while maintaining a neutral monetary stance. The standing deposit facility (SDF) rate now stands at 5%, and the marginal standing facility (MSF) rate and Bank Rate at 5.50%, RBI Governor Sanjay Malhotra announced after the three-day MPC meeting held from December 3–5.
Governor Malhotra said the Indian economy is projected to grow at 7.3% in the current fiscal year—about half a percentage point higher than earlier estimates. Quarterly projections are 7% for Q3 2025-26, 6.5% for Q4, and 6.7% and 6.8% for Q1 and Q2 of 2026-27, respectively. He noted that real gross value added (GVA) grew by 8.1%, driven by strong industrial and services activity.
High-frequency indicators suggest domestic economic activity remains robust in Q3, though some leading indicators show early signs of weakness. On inflation, the RBI now projects CPI inflation at 2% for 2025-26, with Q3 at 0.6% and Q4 at 2.9%.
CPI inflation for Q1 and Q2 of 2026-27 is projected at 3.9% and 4%, respectively. Governor Malhotra highlighted that GST rationalization and festival-related spending supported domestic demand in October-November. Rural demand remains strong, urban demand is gradually recovering, and private investment is gaining momentum, supported by high capacity utilization and expansion in non-food bank credit. Merchandise exports fell sharply in October amid subdued external demand, while services exports softened.
Rajeev Sharan, Head of Criteria, Model Development & Research at Brickwork Ratings, said, “By cutting the repo rate by 25 bps while maintaining a neutral stance, the MPC has prioritized sustaining growth without losing sight of its 4% inflation target. The move should boost investment and consumption into 2026 and is mildly credit positive for highly leveraged corporates and interest-sensitive sectors.” Sujan Hajra, Chief Economist & Executive Director at Anand Rathi Group, noted that the rate cut was widely expected, alongside upward revisions in FY26 GDP growth and lower retail inflation forecasts.
“Alongside the rate cut, the RBI announced open market purchases and swap transactions, signaling a clear easing bias. The main driver behind the policy shift is the sustained downside surprise in inflation prints,” Hajra added.
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