Tirupur, Dec 7 (KNN) Tiruppur Exporters Association (TEA) has said if the banks resort to increase export credit rate at this juncture, then certainly the competitiveness of Tiruppur knitwear export sector will get reduced.

The exporter’s body cautioned that this will happen at a time when India’s competing countries have reduced the rate of interest and also deep depreciation of their currencies, said a press release.

K. M. Subramanian, President of TEA pointed out the declining export trend of Tirupur Knitwear Cluster for the past four months and warned against the increase export credit rate. 

He further said that RBI has increased the Repo Rate by 35 basis points to contain the inflation and at the same time to support for the growth.

Subramanian noted the challenging unusual business scenario in the global market due to twin impact of Ukraine war and COVID-19 pandemic.

TEA President said the major requirement for Tiruppur is increasing of the Interest Subvention provided under Interest Equalization Scheme from 3% to 5% across the board as existing pre COVID period.

He also requested the central bank to extend “Export Refinance Scheme" to banks to augment export credit.

“Under such a mechanism, banks may be encouraged to provide export credit in Rupee to exporters and the same amount can be refinanced by the RBI at the Repo Rate,” he said.

He opined that it will bring down the interest cost for export credit providing much needed competitiveness to our exports.

Subramanian advised exporters to opt for foreign currency denominated credit which is available at LIBOR+150-200 basis points and provide a comfort, during the extreme volatility in dollar, without any hedging cost.

Published On : 07-12-2022

Source : KNN India