The monetary policy review by Reserve Bank of India this week, the first after demonetisation, is being eagerly awaited by the knitwear manufacturers.
They want to know whether the interest rates for loans would come down as suggested by authorities.
“The repurchase rate (the rate at which RBI lends to commercial banks) has to be brought down at least by 50 basis points to less than 5 per cent. More importantly, the RBI and other authorities should ensure that the commercial banks pass on such benefits to the end customers. On most of the earlier occasions, the rate cuts by RBI was not effectively transmitted to the loan borrowers,” said G.R. Senthilvel, secretary, Tirupur Exporters and Manufacturers Asociation.
The capital-intensive knitwear sector is already reeling under the cascading effects of currency crunch after demonetisation.
“Apparel manufacturers are facing lower demand in the market as the retailers have reduced the purchases due to currency crunch. So, loans with soft interests are essential for the apparel production units to maintain inventory of raw materials for future production requirements,” said S. Dhananjayan, a senior member of Institute of Chartered Accountants of India.
The knitwear manufacturers feel that a reduction in repurchase rates would put the sector back into the growth trajectory.
