With the 1991 policy reforms, specific privileges, such as Cash Compensatory Support (direct financial assistance to exporters to offset certain costs) to particular exporting industries, were withdrawn. C. Rangarajan, as Governor of the Reserve Bank of India (RBI) set up the Committee on Structure of Export Credit in September 1992 under the chairmanship of G. Sundaram, Additional Secretary of the Ministry of Commerce, to address complaints related to the structure of export finance in India. Members included Jagdish Capoor (Chief Officer, Industrial and Export Credit Department, RBI); K. N. Bhargava (Additional Controller, Exchange Control Department, RBI); M. V. Raghavachari (Adviser-in-charge, Credit  Planning Cell, RBI); N. Valluri (Joint Secretary, Ministry of Finance); N. M. Chordia (Export Credit Guarantee Corporation); P. D. Patodia (FIEO); J. M. Gandhi (FICCI); A. K. Bakhshy (Indian Banks Association); V. Ananthakrishnan (Chief Executive, Foreign Exchange Dealers Association of India); M. R. Bhansali (Chairman; Gem & Jewellery Export Promotion Council); P. H. Mathani (Chairman, Council for Leather Exports); V. S. Bharucha (Additional Economic Adviser, Ministry of Commerce); and H. Natarajan (Joint Chief Officer, RBI and Member-Secretary). The committee was tasked with examining various aspects of export credit, including interest rates at both pre- and postshipment stages, the cost of funds to banks, general lending rates, the feasibility of RBI refinancing, and the impact of interest costs on the total cost of exported commodities.

The findings revealed significant challenges faced by exporters, particularly the doubling of interest rates in August 1991 and the withdrawal of export incentives such as Cash Compensatory Support, which adversely affected their international competitiveness. The interest rate on export credit in India was found to be among the highest globally, being around 15 percent, compared to about half that high in Japan and Germany. The Commerce Ministry advocated reducing export-finance interest rates to single digits in the future. However, banks faced constraints in lowering interest rates because of the high cost of funds and limitations on RBI’s refinance facilities. The committee highlighted the need for improved credit flow, recommending that by June 1993, RBI should ensure a minimum export-credit level equivalent to 10 percent of each bank’s net bank credit. Export credit outstanding was notably low, with Rs. 10,695 crores in March 1992, representing only 24.3 percent of total exports, below the desired average of 26 percent. Additionally, significant delays in sanctioning export credit—due to administrative inefficiencies within banks and incomplete applications from exporters—were identified, prompting recommendations for more efficient loan-sanctioning processes.

The committee recommended that RBI review and potentially lower interest rates for export credit, aligning them with overall monetary and credit policies. It advised ensuring a corresponding reduction in export-credit interest rates if there was a policy decision to reduce the minimum lending rate for commercial loans. To provide relief to exporters, it proposed withdrawing the tax on interest for export credit and exempting earnings on export finance by banks from income tax. The committee also suggested a uniform refinance percentage for all banks, replacing the existing two-tier formula based on past performance, and providing 100 percent refinance to encourage export-credit provision. Emphasizing the need for improved infrastructural support for exporters, they called for better power and transport facilities and enhanced coordination among state governments and electricity boards. The committee also advocated declaring the export sector a priority sector to ensure better credit flow. To ensure compliance with the stipulated export-credit levels, it stressed the importance of continuous monitoring and enforcement of credit flow directions by the RBI.

The Sundaram Committee highlighted issues such as high export-credit interest rates, inadequate credit flow, and delays in sanctioning loans, which hampered exporters' competitiveness. Its recommendations, including lowering interest rates, enhancing infrastructural support, and prioritizing export credit, aimed to address these challenges and strengthen India’s export finance framework.