Increase Interest Equalization scheme rate: TEA tells govt

06 Jun '18

1 min read

The Tiruppur Exporters Association (TEA) has urged the government to increase the Interest Equalization scheme rate from 3 per cent to 5 per cent to compensate increase in repo rate. In its second Bi-monthly Monetary Policy, 2018-19, the Monetary Policy Committee of the Reserve Bank of India (RBI) has increase repo rate by 25 basis points to 6.25 per cent.

“The increase in repo rate at this juncture will increase the cost of credit to exporting units and will have a detrimental effect on exports since Tiruppur knitwear units have been already reeling under pressure due to various factors and unforeseen ramifications after implementation of GST,” TEA president Raja M Shanmugham said in a press release.

Since exporting units take up orders six months prior to shipment, they are not in a position to increase the prices amidst stiff competition in the global market, noted Shanmugham.

He added that the increase in repo rate would particularly affect MSMEs, and hence, banks should take a lenient view while giving credit to such export-oriented units.

In fiscal 2017-18, knitwear exports from Tiruppur declined to ₹24,000 crore from ₹26,000 crore registered in the previous fiscal. (RKS)

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