Apex body of apparel exporters AEPC has asked Finance Minister P Chidambaram to reintroduce the system under which exporters can avail loans at a lower interest rate of 7.5%.
At present, exporters get loans at a interest rate of over 12%.
Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said he has written a letter to the Finance Minister in this regard.
In the letter Sakthivel said, "RBI has announced credit policy. However, the garment exporters were expecting lowering of rate, which have not been announced. The pre and post shipment credit rates are hovering around 10% which are high when compared to interest rates available to our competitors."
"Earlier, there was a separate chapter for interest rates for the apparel exports sector. The industry appeals to you for reintroduction of the separate rates of fixed 7.5% for the labour-intensive sectors of clothing and textiles," he said.
AEPC said apparel exporters, who are facing sluggish demand in major markets like the US and Europe, have been demanding a separate chapter for interest rates to become more competitive in global market, Sakthivel said.
The US and Europe together account for over 65% of the country's garment exports.
Besides, he said, with the government raising rate of interest subsidy for exporters to 3% from 2% would be a great help to the labour-intensive sector employing over 11 million workers.
India's apparel exports declined by 5.76% to $12.92 billion in 2012-13 due to demand slowdown in major markets.