Tamil Nadu: Garment exporters want credit refinancing extended
The RBI must extend the export refinance scheme to banks to augment export credit, says Tiruppur Exporters Association president KM Subramanian.
Published: 08th December 2022 05:09 AM | Last Updated: 08th December 2022 05:09 AM | A+A A-
TIRUPPUR: With RBI increasing repo rate by 0.35% to 6.25%, garment exporters have called for extension of export finance scheme.
Speaking to TNIE, Tiruppur Exporters Association (TEA) president KM Subramanian said, “Exports from Tiruppur knitwear cluster has declined over the last four months. If banks resort to increasing export credit rate now, it will reduce competitiveness of the sector which is battling stiff competition. The RBI must extend the export refinance scheme to banks to augment export credit. Doing so would encourage banks to provide export credit in rupee to exporters and the same amount can be refinanced by the RBI at the repo rate.”
Federation of Indian Export Organisations (FIEO) president A Sakthivel added, “The increase in repo rate is on expected lines, fulled by fears of a further Fed rate hike in the US. One should realize that global trade is passing through a difficult phase due to high inflation, reducing purchasing power, and high volatility in currencies. We have to ensure that further increases in export credit rates should not blunt our competitive edge as we are losing out to our competitors in countries with reduced rates of interest and deep depreciation of currencies. Extending export Refinance Facility will bring down the interest cost for export credit providing much-needed competitiveness to our exports.”
An official from finance ministry said, “The Indian financial market is facing rising pressure from various quarters, not just inflation, but also the current US dollar’s ongoing unpredictability, and ongoing monetary tightening. Moreover, there is a rising concern about the worldwide recession in financial markets, these factors might have a detrimental effect on emerging market economies. In order to control persistent inflation, RBI will keep working to maintain financial stability and as the first step has increased the repo rate.”