Reacting to the Second Quarter Review of Monetary Policy Statement 2013-14, Dr A Sakthivel, Chairman AEPC, stated that, “The synergistic efforts of all the stakeholders including Govt. has resulted in the average export growth of around 13% in the last six months in this fiscal by garment sector.
"With the improvements in global sentiments which have renewed the prospect of capital outflow in the emerging and developed markets, India was poised to become a significant player.
“But, increasing the repo rate to 25 basis points rate will act as a detrimental to the industry because it will further stress the liquidity condition. Revising of the marginal standing facility (MSF) rate by 25 basis points from 9.0 per cent to 8.75 will not be very effective in easing out the tight liquidity condition.”
The industry is facing the high cost of finance, increasing the repo rate increase the lending interest rate. AEPC has already requested for separate chapter for pre/post packing credit rate of 7.5%. RBI should consider this once again so that momentum of garment export growth is not lost, he added.
Chairman AEPC, further said, “With CAD also expected to moderate in line with the trade deficit which was two and half year low at 86.76 billion US $ for the month of September 2013 and rupee fall has seized, due to the liquidity tightening measures industry was expecting the reduction of the interest rate.
"We are an employment critical sector and 80% of garment Industry being SME’s it will severely impact the export and employment growth. Further it will also diminish the business and consumer confidence. I request Government to revise the interest rates downwards so that we leverage our export and employment potential.”
Highlighting the strength of the garment Industry Dr A Sakthivel, informed, “India is one of the largest exporters of readymade garments and made-ups to the World. India is considered as the second most preferred destination for major global retailers due to its strength of vertical and horizontal integration.
“India has emerged as an important sourcing base for leading brands like Nike, Reebok, Pepe Jeans, FCUK, Armani, Versace etc. The strength of the country’s products is reflected in the repeat orders from these brands / companies and increase in their outsourcing from India. The industry has survived global recession due to a robust domestic market. Working Group for the Textiles & Jute Industry for the Twelfth Five Year Plan identifies Textiles as a focus Industry which has potential to spur manufacturing.”
RBI released Second Quarter Review of Monetary Policy 2013-14 in which they made the following announcements:
• RBI have reduced the marginal standing facility (MSF) rate by 25 basis points from 9.0 per cent to 8.75 per cent with immediate effect;
• RBI have also increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.5 per cent to 7.75 per cent with immediate effect; and
• the liquidity provided through term repos of 7-day and 14-day tenor has been increased from 0.25 per cent of net demand and time liabilities (NDTL) of the banking system to 0.5 per cent with immediate effect .
