CITI hails RBI rate cut, seeks lower borrowing & better MSME credit

The Confederation of Indian Textile Industry (CITI) is very thankful to the Reserve Bank of India (RBI) for announcing a cut in the repo rate by 25 basis points to 5.25 per cent and remains hopeful that this would translate into lower cost of borrowing and ease of capital availability for micro, small and medium enterprises (MSMEs) in the textile and apparel sector in future.

“The latest cut in the repo rate is an extremely positive measure taken by the RBI to fast-track overall growth and development,” CITI chairman Ashwin Chandran said.

“Our expectation now would be that this would get reflected in lower cost of borrowing and banks easing access to capital for MSMEs in the textile and apparel sector, many of whom often face a challenge on this front,” Chandran added. Banks are often reluctant/slow to pass on rate cuts to customers.

Most companies in India’s textile and apparel sector, one of the largest job-generators in the country, are MSMEs.

Chandran said it was heartening to note that the RBI has projected real GDP growth for the financial year 2025-26 at 7.3 per cent. “The resilience shown thus far by the Indian economy to global headwinds is commendable and stands testimony to the inherent strength of our domestic economy,” he added.

The CITI chairman said the RBI forecast of an overall softening in inflation was also good news. The RBI has revised downward its projections for average headline inflation in 2025-26 and Q1 of 2026-27. The RBI has now said that both headline and core inflation are expected to be around the 4 per cent target during the first half of 2026-27.

India’s textile and apparel sector is among those hit hardest by the 50 per cent tariff imposed by the United States on Indian goods, effective August 27.

The US is the single-largest market for India’s textile and apparel items, with around 28 per cent of these Indian goods being sold in the world’s No. 1 economy. India’s textile and apparel exports to the US in the financial year 2024-25 stood at nearly $11 billion.

ALCHEMPro News Desk (HU)