Tirupur Exporters Association (TEA) has said the increase in Repo Rate at this juncture will increase the cost of credit to exporting units and will have a detrimental effect on exports since Tirupur knitwear units have been already reeling under pressure due to various factors and unforeseen ramifications after implementation of GST.
Reacting to RBI’s announcement, Shri. Raja M Shanmugham, President, TEA, in a media statement on 6 June, said, “In the last fiscal year, the knitwear exports from Tirupur have declined to Rs.24,000 crore against Rs.26,000 crore recorded in 2017-18 and is taking all efforts to sustain in the global market.”
It may be noted that Shri.Urjit Patel, Governor, RBI on 6 June 2018 announced Second Bi monthly Monetary Policy for the year 2018 -19 and noted the decision of Monetary Policy committee to increase the policy repo rate by 25 basis points from 6.00% to 6.25%.
Shri. Raja M Shanmugham further pointed out that since the exporting units have been taking up orders six months back and they are not in a position to increase the prices amidst of stiff competition in the global market and added that the MSMEs will get affected. he said when the interest rate in the international market is between 2% to 4%, in our Country, the interest rate is in the region of 11% and to compensate that only, Government has announced Interest Equalization Scheme and providing 3% Interest subvention the packing credit and he appealed to increase the Interest Equalization scheme rate from 3% to 5% immediately.
Shri.Raja M Shanmugham said the banks should take a lenient view while giving credit to the exporting units, particularly MSMEs.