Textile exports: Industry welcomes new interest subsidy scheme

CCEA approved 3% subvention scheme for exporters for five years with retrospective effect from April 1, 2015

The new interest subsidy scheme for textile exports has been welcomed by the industry, while urging its ambit be widened.

The new Interest Equalisation Scheme, earlier termed the Interest Rate Subvention Scheme, on pre-shipment and post-shipment of garments, will boost cotton textile export, said R K Dalmia, chairman, Cotton Textiles Export Promotion Council (Texprocil).

The Cabinet Committee on Economic Affairs has approved a three per cent subvention scheme for five years, with retrospective effect from April 1, 2015, to be reviewed after three years. A big relief for the sector, as exports have been declining for a while.

The new scheme will allow garment makers to compete with Bangladesh, Pakistan, Sri Lanka and Vietnam, their competitors, in developed country markets.

“The scheme will provide a much-needed boost to export of cotton textiles, as all categories of fabrics and made-ups have been covered. Exporters were keenly looking forward to this, as they are facing depressed market conditions and declining exports,” said Dalmia.

The scheme is not available for cotton yarn and merchant exporters. Dalmia said the former are also passing through difficult market conditions and should be covered under the scheme.

Naishadh Parikh, chairman, Confederation of Indian Textile Industry, said: “(Our) major markets are experiencing negative growth. Indian exporters are handicapped by higher custom duties on import of textiles in major markets. (This) scheme, coupled with the recently revised Merchandise Export from India Scheme, should help in reversing the trend of falling exports across the textile value chain.”

In the present scenario, the differentiation between manufacturers and merchant exporters is diminishing. There is no reason why the latter should be denied the benefit of a concessional rate of interest on export finance, said Texprocil. Texprocil urged the government to include cotton yarn under the scheme and also to extend the benefit of the scheme to the merchant exporters.