Commenting on the seventh bi-monthly monetary policy of 2019-20 announced by RBI on Friday, A Sakthivel, Chairman, Apparel Export Promotion Council (AEPC), said, “We welcome the 75 basis points cut in repo rate by the RBI, considering the impact of Covid-19 related lockdowns on economic activities.
“We hope that the cut in the repo rate to 4.4% would translate into lower lending rates for both retail and corporate credit, and would thus encourage consumption and investment,” Sakthivel, said.
Cut in reverse repo rate by 90 basis points to 4% will encourage banks to lend money to productive sectors rather than parking it with the RBI, the AEPC chief said.
“Also, the cut in CRR by 100 basis points to 3% will improve the much-needed liquidity in the economy,” he added.
The three-month moratorium on EMIs on all outstanding loans comes as a big relief for both corporates and individuals, Sakthivel, said, adding that deferment of interest on working capital facilities and easing of working capital financing are welcome steps.
These are crucial for the apparel export industry which is facing cancellations of export orders and delays in shipments.
“However, to help the Apparel export industry and its 12.9 million workforce tide over these difficult times, more needs to be done.
“There should be no penalty on advance forex booking and postponement of EMIs by six months to start with.
The government should advise the banks to delay declaring company’s accounts as NPAs for one year due to the economic fallout.
This industry needs immediate relief in terms of faster clearance of banking and packing credit, late realization of export bills and raising of advance limit to 25 per cent without any collateral to ease working capital constraints.
“We look forward to an immediate and financially viable Financial Stimulus Package that would ensure that our losses are minimized and we play our small but effective role in ensuring that the nation’s economy continues to function close to normalcy.”
The Council also requested for an extension of the Interest subvention scheme beyond 31st March 2020. Also, the interest subvention of 5% available to the MSMEs be extended to all units, especially in a labour intensive sector like the Apparel export industry.
Besides, the AEPC has also asked the Hon’ble Minister of Labour and Employment for the following:
“The government needs to extend the Provident Fund, ESI and other related benefits for workers of small establishments to our Apparel workers as well. The Council requests the government to provide relief in terms of our obligation towards the workers by way of contributing wages/salaries for six weeks. The industry may also be allowed to defer payment of PF/ ESI and electricity charges by a period of three months.”
In addition, the Hon’ble Finance Minister has been urged that the benefits that are due to the Apparel exporters in terms of RoSCTL and GST may be released at the earliest.
This will not only save this Apparel export industry of long standing and repute in the International market, but also save the livelihood of its 12.9 million employees and their families.