AEPC Chairman raises concern over hike in repo rates

a) The policy repo rate under the liquidity adjustment facility (LAF) increased by 25 basis point from 7.75% to 8%.

b) CRR kept unchanged at 4% of net demand and time liability (NDTL)

c)Consequently, the reverse repo rate under the LAF stands adjusted at 7%, and the marginal standing facility (MSF) rate and the Bank Rate at 9%.

Reacting on the Third Quarter Review of Monetary Policy 2013-14, Mr. Virender Uppal, Chairman of AEPC, has expressed his serious concerns on increasing the repo rate by 25 basis paisa points. In his statement, Mr. Uppal said, “The garment exports despite many inhibiting factors have been surging ahead with a growth rate of 16% over the last three quarters, vis-à-vis same period last year.

“The Government expectations from Apparel exporters are even higher and they expect us to grow at over 31 % on YoY basis. The garment exporting units are expected to invest in product development and also replace the old machineries to increase their competitiveness and efficiency, and therefore, the credit needs are required to be replenished at a much lower flat rate of interest.

“In fact, AEPC has been pitching for priority sector lending for this sector and has even proposed a flat rate of 7.5% for all its credit needs under a separate chapter for exports. Any further increase in credit rates would be a body blow to the Apparel Exporters.

"Therefore, on behalf of the Industry and apparel exporting fraternity, I would urge the Ministry of Finance, Ministry of Textiles and RBI to consider our demand favourably so that, we remain competitive and the momentum of growth is also not lost.”

Mr. Uppal, expressed his concerns on the subdued economic outlook and contracting of the manufacturing activities. He said that garment sector employs highest number of workers in the manufacturing sector and the prevailing conditions might lead to loss of employment too.  Inputs cost over the recent times has escalated, which results into high costs for finished products leaving very thin margins of profit.

Apparel Exports Promotion Council