Interviews
'Do not withdraw 4% interest rate subvention' - CITI
30 Sep '08
2 min read
While the Reserve Bank of India (RBI) has decided to withdraw the 4 percent interest rate subvention benefit granted to the textile exporters from today, the Ministry of Textile has proposed to the Union Cabinet for an extension of the scheme till March 31, 2009.
This benefit was provided to the Indian exporters in April when the domestic market was reeling under the pressure of rupee appreciation and profits of the exporters plummeted. But due to the recent 12 percent depreciation in Indian currency against dollar, the benefit is being withdrawn by the Centre.
However, the textile industry has demanded extension of the interest rate subvention benefits as the industry has been suffering from various other problems such as high raw material costs and decreased demand from the US.
In an exclusive interview with Fibre2fashion, DK Nair, Secretary General of Confederation of Indian Textile Industries (CITI) stated, “Government had announced two incentives in the wake of rupee appreciation - a 4 percent subvention of interest rates on export credit and an increase in draw back rates. However, interest rates on packing credit in India were higher than those in all competing countries and the draw back rates had not taken into account all the taxes paid on exported goods.
We have conveyed to the Government that state level duties are still not reimbursed to exporters and interest rates in India have increased substantially in recent months and therefore the draw back rates should be increased by 2 percent from the original rates and the interest subvention should be continued. We understand that Textile Ministry has supported our requests, but the Finance Ministry has not yet announced the continuation of the measures.”
This benefit was provided to the Indian exporters in April when the domestic market was reeling under the pressure of rupee appreciation and profits of the exporters plummeted. But due to the recent 12 percent depreciation in Indian currency against dollar, the benefit is being withdrawn by the Centre.
However, the textile industry has demanded extension of the interest rate subvention benefits as the industry has been suffering from various other problems such as high raw material costs and decreased demand from the US.
In an exclusive interview with Fibre2fashion, DK Nair, Secretary General of Confederation of Indian Textile Industries (CITI) stated, “Government had announced two incentives in the wake of rupee appreciation - a 4 percent subvention of interest rates on export credit and an increase in draw back rates. However, interest rates on packing credit in India were higher than those in all competing countries and the draw back rates had not taken into account all the taxes paid on exported goods.
We have conveyed to the Government that state level duties are still not reimbursed to exporters and interest rates in India have increased substantially in recent months and therefore the draw back rates should be increased by 2 percent from the original rates and the interest subvention should be continued. We understand that Textile Ministry has supported our requests, but the Finance Ministry has not yet announced the continuation of the measures.”
Fibre2fashion News Desk - India
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