TAMIL NADU

Campaign to popularise export credit facilities in foreign currencies

To help apparel exporters reduce the cost of working capital borrowings, the NIFT-TEA Knitwear Institute is all set to roll out a campaign to popularise export credit facilities in foreign currencies in Tirupur knitwear cluster with the participation of bankers.

Meeting

The decision was following the participation of entrepreneurs in a meeting with the RBI Deputy Governor H.R.Khan, near here, on Saturday.

In the meeting, the official reiterated the need for encouraging more utilisation of pre-shipment and post-shipment credit in foreign currencies extended by the government.

At present, only less than 10 per cent of the garment exporters in Tirupur cluster are using the various export credit in foreign currencies to meet the working capital requirements in the execution of orders from foreign buyers while the majority has still been opting for such credits in rupees.

Interest rates

“Our crusade, to be carried out by means of seminars and lectures, will aim at educating the predominant small and medium scale exporters in the cluster how the use of export credit in foreign currencies, instead of in rupee, can save them huge amount as interest rates in the case of credit in foreign currencies is extremely low vis-à-vis the rupee advances,” NIFT-TEA Institute chairman Raja Shanmugam told The Hindu .

Volatility of

currencies

According to him, the exporters also need to understand that the export credit in foreign currencies are not at all linked with the volatility of the currencies rather it serves as ‘natural hedges’ against the vagaries of wide fluctuations of foreign currency values.

“To elaborate it, the exporter taking the facility will be given the Indian rupee equivalent for say one lakh dollar on the then existing rate while he need to return the amount only as one lakh dollar as soon as he gets the payment from foreign buyer in dollars,” Mr. Raja Shanmugam explained.