New Delhi: India remains in a relatively strong position on inflation management compared to major global economies, industry body ASSOCHAM said on Friday, urging the Reserve Bank of India (RBI) to maintain status quo on interest rates in its upcoming monetary policy review.

The recommendation comes at a time of heightened global uncertainty due to geopolitical tensions, particularly the ongoing conflict in West Asia, which has triggered volatility in energy prices and raised inflation concerns worldwide.

India fares better than major economies

ASSOCHAM’s latest analysis highlights that India’s retail inflation has remained largely stable in recent months. The data shows a marginal increase from 3.2 per cent in February 2026 to 3.5 per cent in April 2026 — a rise of just 0.3 percentage points.

In contrast, inflationary pressures have been more pronounced in several advanced economies. The United States, for instance, witnessed a sharp jump in inflation from 2.4 per cent to 3.8 per cent during the same period.

European economies such as France, Germany and Italy also recorded increases exceeding one percentage point. Similarly, Brazil experienced a more significant uptick, with inflation rising from 3.8 per cent to 4.4 per cent.

Meanwhile, some countries including China, the United Kingdom and Russia showed signs of easing inflation, which helped partially offset global pressures stemming from geopolitical instability.

ASSOCHAM noted that despite rising global energy prices, India has managed to maintain inflation within a comfortable range, reflecting strong macroeconomic management and policy coordination.

RBI advised to avoid rate hike

In light of the current inflation trajectory, ASSOCHAM has recommended that the RBI refrain from increasing interest rates in its June monetary policy review.

ASSOCHAM President Nirmal K Minda stated that India’s headline inflation remains under control, even as fuel prices pose potential risks. He emphasised that any inflationary spike due to energy costs is likely to be temporary in nature.

According to the industry body, raising interest rates at this stage could negatively impact business sentiment and dampen demand across sectors. A stable rate environment, it argued, would be more conducive to sustaining economic growth amid global uncertainties.

ASSOCHAM also welcomed the RBI’s recent move to conduct a $5 billion USD/INR buy-sell swap auction scheduled for May 26. The measure is aimed at injecting durable liquidity into the banking system while supporting the country’s foreign exchange reserves.

Support measures for MSMEs suggested

Beyond interest rate policy, ASSOCHAM has proposed a series of targeted measures to support micro, small and medium enterprises (MSMEs), particularly those exposed to export markets and energy-intensive operations.

The industry body has suggested the introduction of a Rs 1 lakh crore On-Tap Long-Term Repo Operation (LTRO) scheme at the repo rate. This would enable banks and non-banking financial companies (NBFCs) to extend affordable credit to MSMEs facing cost pressures.

Additionally, ASSOCHAM has recommended a 2 per cent interest subsidy on working capital loans of up to Rs 5 crore for businesses dependent on exports to regions such as the Middle East and North Africa (MENA) and the European Union.

To further cushion the impact of rising energy costs, the organisation proposed a six-month loan moratorium or interest support scheme for energy-intensive MSMEs. Such measures, it said, would help businesses maintain operational stability and avoid financial distress.

Global uncertainty remains a key risk

The industry body pointed out that geopolitical developments, particularly in West Asia, continue to pose risks to global economic stability. Fluctuations in crude oil prices remain a critical concern for inflation trajectories across countries.

However, India’s relatively stable inflation outlook provides policymakers with the flexibility to prioritise growth without resorting to aggressive monetary tightening.

Conclusion

ASSOCHAM’s assessment underscores India’s resilience in managing inflation amid challenging global conditions. With retail inflation remaining within a manageable range, the case for maintaining current interest rates appears strong.

As the RBI prepares for its June policy review, the focus is likely to remain on balancing inflation control with growth support. A calibrated approach, combined with targeted relief for MSMEs, could help sustain economic momentum while navigating external uncertainties.