An apex exporters' body for apparel and garments has demanded a separate chapter for exporters in the banking sector.
Apparel Export Promotion Council (AEPC) has requested the central bank for separate chapter for pre/ post packing credit rate of 7.5 percent. Even the Padmanabhan committee constituted by RBI has recommended this sector to be covered under the priority sector lending.
"RBI should consider this favorably so that momentum of garment export growth is not lost. I therefore, request Government to revise the interest rates downwards so that we leverage our export and employment potential," said Chairman AEPC, Virender Uppal in a press statement Wednesday.
Chairman AEPC also demanded that RBI should notify extension of the 3 percent interest subvention which has expired on 31st March 2014 as the garment exporters are trying hard to meet the target set by the Government.
RBI Tuesday released first bi-monthly Monetary Policy Statement for the year 2014-15 where the key rates like repo rate, CRR, Bank rate and repo rate remained unchanged and the Textiles Exporters were not very happy with the announcement made on Tuesday.
With RBI resisting any reduction of interest rate/ repo rate, Chairman AEPC has expressed his concern that the momentum of the garment export growth may be slowed down further with increase of rupee strengthening over dollar.
In his statement, Chairman AEPC said, "With the inflation hovering around 5 percent and core sector growth improving to 4.5 percent in February, impacting positively on industrial production, industry was expecting some relief in terms of lowering of interest rate. With Current Account Deficit also expected to moderate in line with the trade deficit, there was clearly fiscal room for RBI to reduce the interest rate."
This job critical industry is suffering from high input cost leading to reduced profit margins. Majority of our factories are SME's and an employment generating sector, and due to adverse consequences of not lowering interest rates, it might lead to the loss of jobs and further slowing of manufacturing activity, he added.