Tamil Nadu   

Exporters ask RBI to continue interest rate subvention benefit

COIMBATORE: The Tirupur Exporters’ Association has appealed to the Reserve bank of India (RBI) to continue the interest rate subvention benefit for garment exporters.

Association president A. Sakthivel has pointed out in a release that the production costs were going up with various input and processing costs on the upward trend. For instance, the manufacturing cost of a knitted Polo T-Shirt went up by 28 per cent during the last three months. Exporters were finding it difficult to remain competitive in the international market. In such a scenario, the RBI in a recent circular to the banks said that the interest rates subvention scheme on export credit should be brought to a close with effect from September 2008.

“The RBI’s circular is a bolt from the blue to the exporting units and it has come at a time when the banks are revising their Prime Lending Rate upwards,” he said.

Further, the garment exporting units had entered into forward booking with the overseas buyers for nine months based on the suggestions of economists and consultants. Apart from this, the Tirupur exporters had lost over Rs. 100 crore in derivative deals. The apex bank issued a circular in April that the interest rate subvention on export credit would continue for one more year. Exporters had worked out their costing and quoted rates to buyers based on the circular. Hence, the RBI should not withdraw the scheme at this juncture, he said.

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