The reduction in repo rate would not stir up investments by entrepreneurs in the export sector, feel industry insiders.
Reiterating the need for a separate chapter for exports in the monetary policy and the need for lowering of interest rates for boosting the growth of the domestic manufacturing sector, Apparel Exports Promotion Council Chairman A. Sakthivel said that the readymade garment exports have to be treated on par with labour intensive sectors such as agriculture and handloom.
“The garment sector in competing countries pays interest at 6 to 7 per cent, but even with the 2 per cent interest subvention, the effective rate of interest here is between 9.5 and 10 per cent. With today’s announcement, the interest rates could soften by 0.25 per cent. This is miniscule,’’ he added.
“The country at this juncture should counter growth and check inflationary trends. Therefore, a positive growth with check on inflation can improve manufacturing,’’ he said.