Apex body of apparel exporters AEPC today expressed serious concerns over the recent hike in key lending rates by the RBI and asked the central bank to provide credit at affordable rates to the sector.
Apparel Exports Promotion Council (AEPC) asked the government and the RBI to provide credit at a flat rate of 7.5 per cent and put the segment under priority sector lending.
"Any further increase in credit rates would be a body blow to the apparel exporters. I would urge the Finance Ministry and RBI to consider our demand favourably so that, we remain competitive and the momentum of growth is also not lost.
On Tuesday, the RBI raised the key policy rate by 0.25 per cent to 8 per cent in a bid to curb inflation.
The council has "proposed a flat rate of 7.5 per cent for all its credit needs under a separate chapter for exports", he said.
He said that the garment exporting units are expected to invest in product development and replacing old machineries to increase their competitiveness and efficiency, and therefore, "the credit needs are required to be replenished at a much lower flat rate of interest".
During April-August 2013, apparel exports declined by 12.16 per cent to USD 5.26 billion. The exports are expected to touch USD 17 billion by end of the current fiscal. In 2012-13, apparel exports declined by 6 per cent to USD 12.92 billion.
The industry is facing problem as there is a demand slowdown in its major markets - the European Union and the US.
