The Reserve Bank of India (RBI) increasing the repo rate will have a direct impact on the sustenance of MSMEs in the garment sector, exporters from the knitwear hub of Tiruppur said on Wednesday, demanding further infusion of liquidity under the Emergency Credit Line Guarantee Scheme (ECLGS).

In a letter to Union Finance Minister Nirmala Sitharaman, Tiruppur Exporters Association (TEA) said ever-increasing prices of cotton, and yarn and geo-political tensions and sanctions including fuel price increase have affected Tirupur export business. 

“Buyers are most reluctant to come forward to increase the prices for the orders and at this crucial situation the increase of Interest rates by banks will further impact the sustenance of MSMEs  in Tiruppur cluster,” TEA president Raja M Shanmugam said in the letter

“We have been already requesting for the announcement of a specified scheme for MSMEs under ECLGs. We want 10 per cent to 20 per cent of the existing credit immediately (released), mainly to bailout the knitwear sector. 95 per cent of the units in MSMEs are reeling under liquidity crisis due to increase in yarn prices, accessories prices, job working and freight charges,” Shanmugam added. 

Due to the aforesaid adverse factors, the MSMEs are finding it difficult to service their loan to banks and sustain in the business, he said. 

Published On : 09-06-2022

Source : Deccan Herald