Urjit Patel, Governor, RBI announced Second Bi monthly Monetary Policy for the year 2018 -19 and noted the decision of Monetary Policy committee to increase the policy repo rate by 25 basis points from 6.00 per cent to 6.25 per cent.
Raja M Shanmugham, President said the increase in Repo Rate at this juncture will increase the cost of credit to exporting units and will have a detrimental effect on exports since Tirupur knitwear units have been already reeling under pressure due to various factors and unforeseen ramifications after implementation of GST. He said in the last fiscal year, the knitwear exports from Tirupur have declined to Rs. 24,000 cr against Rs. 26,000 recorded in 2017-18 and is taking all efforts to sustain in the global market.
He further pointed out that since the exporting units have been taking up orders six months back and they are not in a position to increase the prices amidst of stiff competition in the global market and added that the MSMEs will get affected. he said when the interest rate in the international market is between 2 per cent to 4 per cent, in our country, the interest rate is in the region of 11 per cent and to compensate that only, Government has announced Interest Equalization Scheme and providing 3 per cent interest subvention the packing credit and he appealed to increase the Interest Equalization scheme rate from 3 per cent to 5 per cent immediately. Raja M Shanmugham said the banks should take a lenient view while giving credit to the exporting units, particularly MSMEs.