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GEA seeks restoration of interest subvention
07
Jul '11
Garments Exporters Association has demanded extension of interest rate subvention facility on export credit to labours intensive apparel exporters.

In a statement, Garments Exporters Association, Executive Secretary, Mr Surinder Anand has requested the Government to restore interest rate subvention scheme of 2 percent points on Pre and Post Shipment Export Credit to garment sector of the textile industry. He pointed out that interest rate subvention was earlier granted to labour intensive garment sector but subsequently withdrawn during the last Budget proposals on 31.03.2011.

The withdrawal of the interest subsidy along with recent steep and frequent hike in the interest rate has substantially increased the rate of pre and post shipment on export finance. The export credit as a percentage of net banking credit has also declined. Mr Anand has expressed the fear that rising interest rate would make the garment exports uncompetitive in overseas markets which are already suffering from worldwide recession and global economic uncertainties.

Mr Anand pointed out that the problem of finance is comparatively more acute for the small scale garment exporting sector. It is therefore, essential that adequate facilities of Bank Credit both in terms of long term requirement and working capital should be provided to the exporters. The interest rate for export credit should be lowered as high interest rate increase production as well as transaction costs of exporters.

Mr.Anand further pointed out that the Garments Exporters are going through a serious crisis which is threatening their very existence. The increasing input cost, tight credit policy and high interest rate, severe liquidity crunch, rigid and outdated labour laws, poor infrastructure and high transaction cost, high power cost and frequent power cuts and increasing cost of wages are some of the difficulties being faced by exporters which should be mitigated to the extent possible and a long term solution should be finalized for the efficient functioning of exporters, said Mr Anand.

Garments Exporters Association

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