Tirupur Exporters Association (TEA) has sought the Reserve Bank of India’s (RBI) intervention to help reduce interest rates. The association had said there is no change in the key rates, which would affect the industry.
In a release today, A Sakthivel, president, TEA said, “It was a disappointment that there was no announcement on the reduction of interest rate given to the MSME Export Sector, which is urgently needed to have a competitive edge for sustaining in the global market.”
He added, competing countries, especially China, has reduced interest rates given to exporters at 5.23 per cent. When China is denting our market share in the knitwear sector aggressively in the US and EU markets, the reduction of interest rate has increasingly become a necessity to stay in these markets.
While commenting on the banks’ reaction to RBI signals for reduction of interest rates on previous occasions, Sakthivel said they (banks) have not been reducing their rate in proportion to the reduction of key rates by the RBI and moreover, banks have also been following a wait and watch policy.
He also pointed out that when the RBI has reduced its repo rate by 4.25 per cent since October 2008, of the 77 banks operating in India, only seven banks have reduced their interest rates by more than 2 per cent and 16 banks have reduced their interest rates at 2 per cent.
“We want RBI’s intervention immediately and advice the banks to cut their interest rates so as to increase the competitiveness of the MSME export sector in the global market,” said Sakthivel.
