Tirupur Exporters’ Association (TEA) has reiterated increase in packing credit interest subsidy from 3 per cent to 5 per cent.
In a statement, President of leading trade body, K.M.Subramanian pointed out after noting down the challenging unusual business scenario in the global market due to twin impact of Ukraine war and COVID 19 pandemic, the declining export trend of Tirupur knitwear cluster for the past four months.
He further added that if the banks resort to increase export credit rate at this juncture, then naturally the competitiveness of Tirupur knitwear export sector will get reduced, at a time when our competing countries have reduced the rate of interest and also deep depreciation of their currencies.
He said the major requirement for Tirupur is increasing the interest subvention provided under interest equalisation scheme from 3 per cent to 5 per cent across the board as existing during the pre-Covid period.
TEA also requested RBI to extend ‘Export Refinance Scheme’ to banks to augment export credit. He said under such a mechanism, banks may be encouraged to provide export credit in Rupee to exporters and the same amount can be refinanced by the RBI at Repo Rate.
He advised exporters to opt for foreign currency denominated credit which is available at LIBOR+150-200 basis points and provide comfort during extreme volatility in dollar, without any hedging cost.
