The Tirupur Exporters' Association (TEA) today said the increase in Repo rate would increase the cost of credit to exporting units and have a detrimental effect on exports.
Reacting to RBI's second Bi-monthly monetary policy for 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 knitwear units in Tirupur are already reeling under pressure due to various factors and unforeseen ramifications after implementation of GST.
Knitwear exports from Tirupur have declined to Rs 24,000 crore last year against Rs 26,000 crore the previous year, he said, adding the repo rate increase would have a detrimental effect on exports, even as the industry was taking all efforts to sustain itself in the global market.
Exporting units have been taking up orders since six months back and are not in a position to increase prices as there is stiff competition in the global market, he said.
When the interest rate in the international market was between two to four per cent, it was in the region of 11 per cent in India and to compensate that, the Government has announced Interest Equalization Scheme and was providing three per cent Interest subvention on packing credit, he said.
Shanmugham said the exporters appealed to the government to increase IES from three to five per cent.
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