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Textile industry welcomes RBI repo rate cut
30
Sep '15
The Indian textile industry has welcomed the move of the Reserve Bank of India (RBI) to reduce the repo rate, the rate at which the central bank of a country lends money to commercial banks during shortage of funds, as it will stimulate the much needed investment in the textile industry and help in growth.

RBI governor Raghuram Rajan announced a repo rate cut of 50 basis points, making it stand at 6.75 per cent from 7.25 per cent, with immediate effect in its monetary policy on September 29, 2015. This is RBI’s fourth repo rate cut in the year 2015.

“The repo rate cut indicates that there is a sense of urgency to push the economic growth rate, which is welcome,” Siddhartha Rajagopal, executive director of The Cotton Textiles Export Promotion Council of India (TEXPROCIL) told Fibre2Fashion.com. “It also suggests that RBI does not view inflation as a key risk currently which is a relief to all.”

The repo rate cut of 50 basis points will stimulate the much needed investment in the textile sector as the cost of funds are expected to come down. It will also give a sense of feel good to all at a time when the overall global outlook is still in the recovery mode, he stated.

On a similar note, Avinash Mayekar, MD and CEO of Suvin Advisors echoed, “It is a welcome move by the government as most of the industries are facing the burden of financial cost due to high interest rates, in spite of having an edge over competition because of lower production costs. I am sure this will boost new investments as well.”

Dr A Sakthivel, president of Tirupur Exporters’ Association (TEA) also hailed the interest rate cuts in a press statement issued by TEA, and endorsed the view of the RBI that banks should pass on this benefit to their customers. This will trigger more investments and export. He also sent a letter of thanks to the RBI governor for this measure.

Rajan emphasised that the RBI wishes to be accommodative with respect to its inflation targets, and this rate cut will set the ball rolling.(MCJ)

Fibre2Fashion News Desk - india

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