Interviews
Requisition to exempt exporters from Base Rate Model
23 Jun '10
2 min read
Tirupur Exporters Association (TEA) President - Shri.A.Sakthivel said that he has sent a letter to Shri. Pranab Mukherjee, Hon'ble Union Minister of Finance requesting to exempt exporters from base rate model and advise to provide the export credit at a concession rate of 7%.
We wholeheartedly thank the Hon'ble Finance Minister for taking various prudential measures for the past 1½ years and steered our economy to record 7.2% growth in GDP in the year 2009-10 and this achievement has come at a time when other developed countries are struggling to show 3% growth in GDP. The country has successfully overcome the effect of the global economic slowdown and we expect the GDP will grow at 8.5% during fiscal 2010-11.
Sir, RBI has proposed to implement the Base Rate Model on 1st July 2010 after replacing the current Benchmark Prime Lending Rate (BPLR) and afterwards the actual lending rates charged will be Base Rate plus other specific changes, which will increase the interest rate costlier to exporters, as the concessional export credit facility available (Benchmark Prime Lending Rate – 2.5%) under BPLR system to exporters will be withdrawn.
Our concern is that in spite of concessional facility extended to exporters in the interest rate, the credit for export is still higher than international benchmarks and straight away reducing our competitiveness in the global market. The bank interest rate available to our main competitors in China is only 5.23%.
In view of this, we request the Hon'ble Finance Minister to kindly advice the RBI to exempt the exporters from the proposed base rate system and provide the export credit at a concession rate of 7%.
We wholeheartedly thank the Hon'ble Finance Minister for taking various prudential measures for the past 1½ years and steered our economy to record 7.2% growth in GDP in the year 2009-10 and this achievement has come at a time when other developed countries are struggling to show 3% growth in GDP. The country has successfully overcome the effect of the global economic slowdown and we expect the GDP will grow at 8.5% during fiscal 2010-11.
Sir, RBI has proposed to implement the Base Rate Model on 1st July 2010 after replacing the current Benchmark Prime Lending Rate (BPLR) and afterwards the actual lending rates charged will be Base Rate plus other specific changes, which will increase the interest rate costlier to exporters, as the concessional export credit facility available (Benchmark Prime Lending Rate – 2.5%) under BPLR system to exporters will be withdrawn.
Our concern is that in spite of concessional facility extended to exporters in the interest rate, the credit for export is still higher than international benchmarks and straight away reducing our competitiveness in the global market. The bank interest rate available to our main competitors in China is only 5.23%.
In view of this, we request the Hon'ble Finance Minister to kindly advice the RBI to exempt the exporters from the proposed base rate system and provide the export credit at a concession rate of 7%.
Tirupur Exporters Association (TEA)
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