Commerce minister pleads Govt to extend sops to exporters
The commerce department has taken upon itself the responsibility to address the grievances of the textile industry to the Central Government and to secure the availability of cheap credit for the sector.
With regard to this, Mr Kamal Nath, Commerce & Industry minister has also sent a message to Prime Minister Manmohan Singh, urging him to intervene and ensure continuation of 4 percent interest subvention for the sector which is reeling under the pressure of competition posed by the neighboring countries.
In a bid to tide over appreciation of rupee against US dollar, exporters were granted with a number of sops, all of which are scheduled to be withdrawn on September 30.
In an exclusive interview with Fibre2fashion, Mr DK Nair, Secretary General of Confederation of Indian Textile Industry, stated, “Government had announced a 4 percent subvention in the interest rate of packing credit for labor intensive industry like Textile. The subvention was announced for period up till March 31, 2009. However with the notification issued on August 1, 2008, RBI has stated that subvention will be withdrawn from October 1. Since the Government had announced subvention till March 31, 2009, textile exporters have entered into contracts taking this subvention into account. But these contracts will now become unviable.”
He further added that the textile producers require a time of 4 to 5 months and an additional 2 months notice to cope with the situation which has followed depreciation of rupee and the consequent rise in the cost of raw materials and production.
In the period between January and June this year, exports made to the US increased by a mere 1.79 percent instead of the normal growth of 15-20 percent. In fact, the total textile exports in the ongoing fiscal might be even lower then $20.5 billion made in the previous fiscal.
However, what troubles the industry most is the fact that while the Government is planning to completely do away with incentive for domestic exporters, the governments of China and Pakistan have reinforced their support by providing fresh incentives to their respective textile industries. While China has increased VAT refund given to synthetic and cotton producer to 13 percent against earlier rates of 9 and 11 percent, respectively, Pakistan, too, has introduced a 6 percent Research & Development assistance to its garment exporters which is now being extended to other segments of the textile sector.
This is bound to make business even tougher for Indian manufacturers who are already worried over lower demand from the US, due to economic slowdown and higher material prices which have caused shrinking of their profit margins.
Mr Nair has also emphasized on the need to ensure that the state and central taxes paid by the exporters are refunded either by the state or by the central government without any hassles.
Fibre2fashion News Desk - India