June 6, 2018
COIMBATORE: Tirupur Exporters Association (TEA) on Wednesday said that the increase in repo rate will increase the cost of credit to exporting units and will have detrimental effect on exports.
Reacting to RBI’s second bi-monthly monetary policy for the year 2018 -19 and the decision to increase the repo rate by 25 basis points from six to 6.25 per cent, TEA President Raja M Shanmugham in a statement said that knitwear units in Tirupur have been already reeling under pressure due to various factors and unforeseen ramifications after implementation of GST.
“The knitwear exports from Tirupur have declined to Rs.24,000 crore last year as against Rs.26,000 crore recorded the previous year and the increase in the repo rate will have detrimental effect in exports, even as industry is taking all efforts to sustain in the global market,” he said.
Since the exporting units have been taking up orders six months back and are not in a position to increase the prices amidst stiff competition in the global market.
“When the interest rate in the international market is between two and four per cent, the rate in India is in the region of 11 per cent and to compensate that the Government has announced Interest Equalization Scheme (IES) and providing three per cent Interest subvention on packing credit,” he said.
In view of the proposed increase of repo rate, the exporters appealed to the Government increase IES from three to five per cent, Raja Shanmugham said.