The Garment Exporters of Tiruppur has requested the government and the Reserve Bank of India (RBI) o come up with a new scheme “Export Refinance scheme” for the banks to agument exchange credit.
The president of Indian Organisations (FIEO) said that, there will be an increase in the repo rate by 25 basis point. This will come into an immediate effect with 6.5% in the line. RBI is making an effort to contain inflation and a flight of capital. Before RBI, the US Fed too increased its rate by 25 basis points and Bank of England too increased by 50 basis.
Currently, the global trade is under-going a difficult phase because of the rising inflation, declining purchasing power, counties in recession and high voltality in currencies. In an advice to RBI, it was advised that RBI should be extending the Export Refinance Facility which will encourage the Banks to provide export credit in Indian rupees. With this, the exporters can refinance by the RBI at a repo rate. Such a mechanism will decrease the interest rate for export credit.
According the Mr Subramnian, the increase in repo rates will lead in the hiking of the leading rates. This will impact the financial performance of Tirupur’s exporting units. He has also requested the exporters to opt for foreign currency which has a denominated credit of LIBOR+150-200 basis points and also provide a comfort during the extreme vitality in dollar, without any additional cost.
