Home / Knowledge / News / Apparel/Garments / GEA President disappointed as RBI hikes REPO rate
GEA President disappointed as RBI hikes REPO rate
Jul '11
Mr Rakesh Vaid, President, GARMENTS EXPORTERS ASSOCIATION (GEA) has expressed disappointment on the RBI decision to again increase the Repo rate by 50 basis point which will further hike the interest rates.

Mr Vaid has called for an overall reduction in interest rates and extension of interest rate subvention facility on export credit to labours intensive small scale apparel exporters. He pointed out that interest rate subvention was earlier granted to labour intensive garment sector but subsequently withdrawn. The withdrawal of the interest subsidy along with steep and frequent hike in the interest rate has increased the rate of pre and post shipment on export finance by over 70 per cent.

The export credit as a percentage of net banking credit has also declined. GEA has expressed the fear that rising interest rate would make the garment exports uncompetitive in overseas markets which are already suffering from worldwide recession. The interest subvention is the only effective way to soften the adverse impact of high interest rate, said Mr Vaid.

Mr Vaid pointed out that the problem of finance is comparatively more acute for the small scale garment exporting sector. It is therefore, essential that adequate facilities of Bank Credit both in terms of long term requirement and working capital should be provided to the exporters. The interest rate for export credit should be lowered substantially as high interest rate increase production as well as transaction costs of exporters.

Mr Vaid further pointed out that the declining trend in the growth rate of garment exports would continue and apparel exports would remain below our potential and expectations because of various factors; more importantly the shrinking demand in both the major world markets like the US and the EU.

Apart from this, there have been a number of indigenous factors, particularly high transaction costs, increasing input cost, tight credit policy, high interest rate, severe liquidity crunch, rigid and outdated labour laws, poor infrastructure, high power cost and frequent power cuts, increasing cost of wages and steep hikes in fabric prices adversely affecting the competitive strength and performance of Indian Apparel Industry. Mr Vaid pointed out that GEA had drawn the attention of the concerned authorities regarding difficulties being faced by Garments Exporters because of global economic slowdown, adverse fiscal and trade policies of the Government and withdrawal of some of the export sops which were earlier granted to exporters.

Mr Vaid also stressed the need to increase the current duty drawback rates by increasing the scope and coverage of Duty Drawback Scheme so as to ensure full reimbursement of excise duties, custom duties, service tax, education cess and various state level taxes so as to provide exporters with the level playing field to remain competitive in the international market.

We hope the policy-makers will wake up to the new realities soon and take some action so that we can take on competition from China, Bangladesh, Vietnam and others. We want a pro-active approach by various government departments to streamline procedures and make fiscal corrections, said Mr Vaid.


Must ReadView All

Textiles | On 24th Oct 2016

Indian govt plans roadshows to promote textile exports

The Indian government has planned to conduct roadshows to boost the...

Textiles | On 24th Oct 2016

TPP may hit roadblock

The 12-member Trans-Pacific Partnership (TPP) that was signed earlier ...

Textiles | On 24th Oct 2016

Baba Ramdev’s Patanjali to enter textile manufacturing

Patanjali Ayurved, an enterprise initiated by yoga guru Baba Ramdev,...

Interviews View All

Divyesh Mashruwala
Akshar Industries

Surat dominates foiling, embossing and pleating

Saket Garg
Garg Corporation

The biggest challenge is lack of skilled workforce and competition from...

Ghanshyam Ghoghari
Kimora Fashion

Bridalwear is not about reds and whites anymore

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Steve Cole
Xerium Technologies

Steve Cole of Xerium Technologies discusses the industry. Xerium is the...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies

October 2016

October 2016

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Browse Our Archives


Advanced Search