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Indian apparel makers urge govt to reclassify loans

10
May '12
Garment manufacturers in India have requested the Government to change loan repayment clauses to avoid being treated as non-performing assets (NPAs), in view of the current volatile market conditions.

The Apparel Export and Promotion Council (AEPC) has suggested the Government to extend the two percent interest subvention scheme to overall knitwear and apparel sector, instead of limiting it to the small and medium sector.

The apparel sector has been subjected to 5-6 percent higher credit rates during the past few years. Moreover, the sector has been struggling against recession in its major markets of EU and the US, rise in prices of yarn and fluctuations in foreign currencies, AEPC said.

The events have led to a growing number of apparel manufacturing units in the country failing to pay back their loans and are now on the verge of being classified as NPAs.

AEPC said the banks should restructure the existing loans of garment companies and put a moratorium of two years in term loan repayment.

AEPC has also recommended the Ministry of Commerce to provide a scrip equivalent to two percent of export value of goods under the Focus Market Scheme (FMS) to apparel exports to certain countries during the current financial year. It has named Australia, Brazil, Japan, Russia, South Africa and South Korea as the countries for which the two percent scrip equivalent should be made applicable.

The scrip can be sold for cash or utilized to import items duty-free to the extent of the value of the scrip. Such a step would help the Indian apparel industry diversify into the newer markets in the midst of plummeting demand in its traditional EU and the US markets, AEPC said.

The worries of clothing exporters are likely to be discussed in the Board of Trade (BoT) meeting, scheduled to be held later this month. The BoT meeting would be chaired by Commerce, Industry and Textiles Minister Anand Sharma and it will help finalize the draft Foreign Trade Policy.

Fibre2fashion News Desk - India


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