Staff Reporter | 30 Jul, 2008
Tirupur Exporters' Association (TEA) has requested RBI Governor to advise the banks not to increase the interest rates charged on packing credit and term loan given for exporters and maintain the status quo in interest rates.

Earlier on Tuesday, RBI Governor Dr. Y.V.Reddy presented the first quarter review of Annual Statement on Monetary Policy for the year 2008-09.

As a measure to control the inflation, RBI has increased the Repo Rate by 50 basis points from 8.5% to 9% with immediate effect and Cash Reserve Ratio by 25 basis points from 8.75% to 9% with effect from fortnight beginning August 30.

A. Sakthivel, President, TEA said he is under apprehension that further to hike in Repo Rate and Cash Reserve Ratio by RBI, the banks may resort to increasing the interest rates charged on Packing Credit as well as term loan for exporters soon.

He also mentioned that he has sent a communication to RBI Governor pointing out that the garment exporting units have already been facing a lot of problems due to unexpected movement of currency in diametrically opposite way (depreciation of rupee against dollar) to the predictions were being made by all economists and increase in manufacturing costs due to rise in raw material and power costs coupled with transaction cost.

He further said that it would be difficult for the garment-exporting units to sustain in the global market since the competitors based in other countries are getting loans at lower interest rates.

Sakthivel noted the continuance of surging up interest rates, will have direct impact on the exporters, as the garment prices have been negotiated and fixed based on the previous cost of production.