Mr Rakesh Vaid, President, Garments Exporters Association has expressed disappointment on the RBI decision to again increase the Repo rate by 25 basis point to 8 % which will further hike the interest rates.
In fact RBI had been continuously increasing the Repo Rate resulting in persistent and significant hike in interest rate. The export credit as a percentage of net banking credit has been declining. GEA has expressed the fear that rising interest rate would make the garment exports uncompetitive in overseas markets
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. The uncertain political situation along with prospects of a hung parliament with no single party getting the majority in the next elections has further reduced the business sentiments
Mr Vaid expressed the 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.