Reduction of liquidity provided under the Export Credit Refinance facility from 32 per cent (of eligible export credit outstanding) to 15 per cent will affect both – cost of credit and availability, say exporters, voicing concern over the RBI's liquidity measures.

This measure is to be effected from October 10.

Reacting to RBI's Fourth Bi-monthly Monetary Policy statement, the President of Tirupur Exporters' Association A Sakthivel said the RBI data on Sectoral Deployment of bank credit (collected month-on-month from select 47 scheduled commercial banks) reveals that the deployment of gross credit to the ready made garment sector has slipped by 0.8 per cent during the first five months of this fiscal compared to the preceding five months.

Knitwear exports however have seen a positive growth of 18 per cent. Effecting a rate cut is therefore of paramount importance to sustain the growth momentum.

The Government is yet to announce the 3 per cent interest subvention on packing credit. This scheme expired on March 31, 2014 and is impacting the competitiveness of the garment sector in the international market, Mr Sakthivel said.

Hailing the decision to increase the eligible limit for importers under the past performance route to 100 per cent, he said this move would help importers hedge up to 100 per cent of the average turnover of the past three years or preceding year's turnover, which ever is higher, subject to compliance with the other conditions applicable for hedging under this route.

The association has again reiterated its demand for a separate chapter for the export sector and for fixing the pre and post shipment export credit at 7 per cent.

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