The apex body of exporters today requested the Finance Ministry to cap interest rates on loans to small and medium business units at 7% and sought the inclusion of export credit under priority sector lending in the forthcoming Budget.

"Successive increases in policy rates have made interest rates uncompetitive internationally and hit capital formation and investment," the Federation of Indian Exporters Organisation (FIEO) said in a statement here.

It suggested that interest rates should be capped at 7% for micro, small and medium enterprises (MSMEs) and at 9% for other businesses. FIEO also asked for interest subvention for all export sectors till March, 2013.

The points were discussed by FIEO President Rafeeque Ahmed during his meeting with the Finance Ministry officials in Delhi today.

Ahmed made other requests related to both direct and indirect taxation, the statement said.