With the change in interest rate, many industries are bound to be affected, especially textile industry.
It would influence production cost and financial cost of the business. Experts are of the opinion that before a change in interest rate is made, capacity of entire industry to withstand the resultant impact should be estimated.
The financial leverage of each sector and proportion of debt in entire sector should be worked out.
As 25 percent of the total economy's debt is used to finance textile industry, a subtle change in interest rate can affect textile sector significantly.
Textile sector has a financial leverage ratio of 10.4 percent and change in interest ratio can aggravate business conditions by rise in the cost of doing business.
Similarly, shoes and leather sector shows a very high financial leverage of 44.08 percent.
Experts believe that interest rates should be reduced that would lead to boost in overall sectors earning and help them in extension of capacity and technology upgradation.
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