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Wool sector calls on govt to avail insurance credit
09 Jul '09
1 min read
The wool industry is in a quandary after the withdrawal of QBE from offering credit insurance to some sectors of the textile industry, which includes wool from July 1 and called on the government to support the insurance companies.
QBE, on its part has defended its decision of withdrawing insurance facilities, by saying that it had made huge insurance payouts to the wool industry after overseas buyers did not make the requisite payments.
This has also led to an increase in costs of buying insurance from other big insurance companies, which in the current times is pinching the exporters and making it difficult to trade with European based companies.
The fallout of this crisis could be that business with the biggest importer of wool; China may increase since, importers from China do business, by means of a letter of credit, which is beneficial to the exporters.
Business with the European buyers is done on a 120 days line of credit and experts aver that changing the system may prove to be difficult, since the buyers too are facing acute financial crisis due to the credit crunch.
QBE, on its part has defended its decision of withdrawing insurance facilities, by saying that it had made huge insurance payouts to the wool industry after overseas buyers did not make the requisite payments.
This has also led to an increase in costs of buying insurance from other big insurance companies, which in the current times is pinching the exporters and making it difficult to trade with European based companies.
The fallout of this crisis could be that business with the biggest importer of wool; China may increase since, importers from China do business, by means of a letter of credit, which is beneficial to the exporters.
Business with the European buyers is done on a 120 days line of credit and experts aver that changing the system may prove to be difficult, since the buyers too are facing acute financial crisis due to the credit crunch.
Fibre2fashion News Desk - India
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