TEA President lists bail out measures

12 Nov '08

3 min read

A representation was made to the Central Government by our President Shri. A. Sakthivel with a requisition to consider the issues mentioned so as to protect from job losses and survival of the exporting units.

Shri. A. Sakthivel mentioned that the ongoing financial crisis in US and the EU has started taking a toll on the garment exports and added that already there is a loss of 30% drop in orders which may lead to about 20,000 job losses shortly.

Due to this crisis, the exporting units are reducing the working hours from 10 to 8 and implementing five days per week instead of six days per week. To overcome the concerned problem, the following measures have to be taken immediately to bail out the exporting units from the crisis.

DUTY DRAWBACK RATES:
The Duty Drawback rate currently given to cotton knitwear garment exporters is 8.8% and we request to restore the Duty Drawback to 11%.

REQUISITION TO FIX THE INTEREST RATE AT 6% FOR PACKING CREDIT:
Currently the Interest Subvention extended to exporters are linked with Basic Prime Lending Rate (BPLR) and due to rise in PLR, the exporters are not getting much benefit out of it. We shall therefore, request the Government to announce pre and post shipment credit at 6% Interest rate across the board without linking with Prime Lending Rate (PLR) so as to be competitive and sustain in the global market.

INTEREST MORATORIUM FOR TWO YEARS FOR REPAYMENT OF TERM LOAN:
As most of the exporters had gone for the forward booking, the depreciation of rupee against dollar in recent period is not immediately beneficial to the exporters. In the last year, due to appreciation of rupee against dollar, the exporters have incurred losses and were also finding it difficult to meet the statutory financial commitments.

In this crucial period, the industry needs support from the bank. It may also be noted that due to reduction of orders and delayed payment, we request the banks to give a moratorium for two years for repayment of Term loan.

COMPENSATION TO STATE LEVIES AND TRANSACTION COST:
Compensation should be given to the tune of 3% to the exporters against the State Levies such as OCTROI, other State Taxes and Transaction cost.

DUTY FREE PROCUREMENT OF DIESEL:
The power is one of the major problems for garment units in Tamilnadu and the exporting units are resorting for Captive Power generation using diesel as fuel. Due to higher fuel cost, the exporters are finding it difficult to match the price worked out earlier and also to quote competitive rates.

To overcome this problem, the Gold Card Scheme can be introduced for exporters and the Gold Card holders should be allowed to buy duty free oil from domestic oil companies for their factory use for self generation of power through generators / Captive Power Plant.

Tirupur Exporter's Association

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