The Indian textile industry has welcomed the RBI’s move to reduce the repo rate, the rate at which the central bank of a country lends money to commercial banks during shortage of funds, as it will stimulate the much needed investment in the textile industry and help in growth.
RBI governor Raghuram Rajan announced yesterday a repo rate cut of 50 basis points, making it stand at 6.75 per cent from 7.25 per cent. This is RBI’s fourth repo rate cut in the year 2015.
“The repo rate cut indicates that there is a sense of urgency to push the economic growth rate, which is welcome,” Siddhartha Rajagopal, executive director of The Cotton Textiles Export Promotion Council of India (TEXPROCIL) said. “It also suggests that RBI does not view inflation as a key risk currently which is a relief to all.”
The repo rate cut of 50 basis points will stimulate the much needed investment in the textile sector as the cost of funds are expected to come down. It will also give a sense of feel good to all at a time when the overall global outlook is still in the recovery mode, he stated.
On a similar note, Avinash Mayekar, CEO of Suvin Advisors echoed, “It is a welcome move by the government as most of the industries are facing the burden of financial cost due to high interest rates, in spite of having an edge over competition because of lower production costs. I am sure this will boost new investments as well.”
A Sakthivel, president of Tirupur Exporters’ Association (TEA) also hailed the interest rate cuts and endorsed the view of the RBI that banks should pass on this benefit to their customers. This will trigger more investments and export, he said.