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Sops to bail out textile & garment exporters on anvil
12
Nov '08
The ongoing meltdown and recessionary trends are giving governments worldwide sleepless nights. The government of India is no exception. The Ministries of Commerce and Finance are contemplating an incentive or subsidy package for labour intensive industries to tide over the current crisis.

Among the incentives under discussion is a provision for credit at a subsidized rate and that too for a longer term and also provide incentives to exporters to diversify their markets to other new markets which are not so much affected by the global crisis.

Both the Finance Secretary as well as the Commerce Secretary assisted by the Planning Commission and the Department of Industrial Policy and Promotion are working on the proposal and are expected to announce the recommendations soon.

Before the proposals are vetted in to policy, they are expected to be mulled over by the respective cabinet ministers and the Prime Minister's office. The proposals may be put up on fast track since exports in October have posted a sharp drop of 15 percent after the heady growth of the last few years.

The exporters are complaining of buyers demanding longer credit periods due to which they are demanding cheaper credit for longer periods including waiver of penal interest. Giving interest rate subvention (subsidy on interest) to exporters is expected to be top on the agenda of the government to overcome the main problem faced by them.

During the crisis created by the appreciation of the rupee against the dollar the government had extended a subvention of 2 percent on pre-shipment and post-shipment credit, but was withdrawn in September this year after the dollar started gaining against the rupee though it was supposed to run its course till March next year.

The exporters also have been complaining about letters of credit (LC) not being honoured by their respective banks which may also be looked in to. The main sectors which are expected to be extended this sop are textiles and garments, gems and jewellery, leather, carpets and handicrafts.

Fibre2fashion News Desk - India

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