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FIEO seeks extension of interest subvention for handlooms
02 Mar '12
2 min read
The Federation of Indian Export Organizations (FIEO), the apex body of Indian export promotion organizations, has asked the Government to extend the Interest Subvention scheme for handlooms, handicrafts, carpets and micro, small and medium enterprises (MSMEs) for another year.
The interest subvention scheme was first introduced by the Government in 2009-10 for exporters of eight labour intensive sectors to help the industry cope with negative impact of global economic crisis.
However, the number of sectors eligible for the scheme was decreased to four in 2010-11 and the scheme was discontinued in the 2011-12 Budget. The scheme was once again introduced through a Rs. 17 billion package for exporters in October 2011.
Under the scheme, exporters of handlooms, handicrafts, carpets and MSMEs can avail loans from public sector banks at 2 percent discount to the existing rate of interest. The difference in interest is later on reimbursed by the Government to the banks.
Mr. M Rafeeque Ahmed, President of FIEO, told fibre2fashion, “Indian exports have already come down and any withdrawal of interest subvention will definitely affect Indian exports.”
“In the pre-Budget recommendation, we have suggested continuation of the interest subvention scheme for the next one to improve exports. We have asked for making the scheme applicable to all the exports and not just continue for MSMEs and the three sectors of handicrafts, handlooms, and carpets,” he informs.
Explaining the rationale, he says, “We have put across such a request considering the current market situations and the Euro debt crisis. Unless we are rightly priced, pricing being a great factor, nobody will buy from India. The pricing cannot be made competitive without interest subvention, as the prevailing domestic interest rates are high.”
Talking about other suggestions made by the FIEO for the forthcoming Budget, he reveals, “We have recommended removal of the service charge, which is being levied on commission paid to overseas agents. We have said this is not sustainable and non-residents are not liable to pay taxes, as per the rule.”
The interest subvention scheme was first introduced by the Government in 2009-10 for exporters of eight labour intensive sectors to help the industry cope with negative impact of global economic crisis.
However, the number of sectors eligible for the scheme was decreased to four in 2010-11 and the scheme was discontinued in the 2011-12 Budget. The scheme was once again introduced through a Rs. 17 billion package for exporters in October 2011.
Under the scheme, exporters of handlooms, handicrafts, carpets and MSMEs can avail loans from public sector banks at 2 percent discount to the existing rate of interest. The difference in interest is later on reimbursed by the Government to the banks.
Mr. M Rafeeque Ahmed, President of FIEO, told fibre2fashion, “Indian exports have already come down and any withdrawal of interest subvention will definitely affect Indian exports.”
“In the pre-Budget recommendation, we have suggested continuation of the interest subvention scheme for the next one to improve exports. We have asked for making the scheme applicable to all the exports and not just continue for MSMEs and the three sectors of handicrafts, handlooms, and carpets,” he informs.
Explaining the rationale, he says, “We have put across such a request considering the current market situations and the Euro debt crisis. Unless we are rightly priced, pricing being a great factor, nobody will buy from India. The pricing cannot be made competitive without interest subvention, as the prevailing domestic interest rates are high.”
Talking about other suggestions made by the FIEO for the forthcoming Budget, he reveals, “We have recommended removal of the service charge, which is being levied on commission paid to overseas agents. We have said this is not sustainable and non-residents are not liable to pay taxes, as per the rule.”
Fibre2fashion News Desk - India
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