SIMA appeals to extend interest subvention policy
The Reserve Bank of India had granted incentives to the exporting community by continuing the interest subvention on export credit by one more year till March 31, 2009 and extended the ceiling on interest rates upto October 31, 2008 to compensate the impact of rupee appreciation against US dollar.
Consequent to the strengthening of US dollar, the RBI has announced terminating interest subvention benefit with effect from September 30, 2008. The Government had also marginally increased the duty drawback rates to compensate additional duty paid by the exporting community due to rupee appreciation. Now, there is a move to rationalise the duty drawback rates also.
Dr.K.V.Srinivasan, Chairman, the Southern India Mills' Association (SIMA), has stated that the proposed move would be detrimental for the health of the textile industry and it would be a last straw on the camel's back and would totally paralyse the performance of the industry leading to closure and job losses to millions of people in the country.
Dr.Srinivasan has added that the textile industry has been passing through an unprecedented recession due to very many factors like 45% increase in raw material cost, doubling of bank interest rates, abnormal increase in transport and fuel costs, etc. He has further said that the major textile States like Tamil Nadu, Andhra Pradesh, Maharashtra etc., are facing severe power crisis.
Dr.Srinivasan has pointed out that Tamil Nadu, the hub for the textile business, accounting for one-third of the textile business size has been facing severe power shortage to the tune of 35 to 40%.
SIMA Chief has said that there is a short supply of High Speed Diesel oil and the Oil Companies are rationing and restricting the quantity to 80% of the previous year consumption and in fact, totally stopped supplying HSD oil to the Export Oriented Units and the units in Special Economic Zones.
Therefore, SIMA Chief has appealed to the Centre to continue the export incentive of interest subvention (on pre-shipment rupee credit upto 180 days and post-shipment rupee export credit upto 90 days stipulated at BPLR minus 2.5%) and the duty drawback rate benefits at the current levels for the rest of the financial year to sustain the export competitiveness of the Indian textile industry.
SIMA Chairman has stated that due to the economic slow down in the western countries and the increased inflation in the domestic market, the textile industry is not able to pass on the increased cost of inputs to the consumers.
He has added that there has been a drop in the yarn price during the last few days. Dr.Srinivasan has pointed out that the competing countries like China and Pakistan have increased the export incentives for the textile industry to sustain the export competitiveness.
He has said that the R&D assistance provided to the textile industry long back has now been reintroduced by Pakistan and China has increased the VAT refund (like duty drawback in our country) from 9 to 13% for synthetic textile products and from 11 to 13% for other products during last week.
Dr.Srinivasan has urged the Centre to continue the proactive steps taken by the UPA Government till the end of the financial year and rescue the mother industry at this crucial stage in order to avoid export deceleration, closure of units and massive loss of employment opportunities in the country.
Southern India Mills' Association (Sima)