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ComMin mulling interest subsidy benefit for textiles sector

Press Trust of India  |  New Delhi 

Worried over continuous decline in exports, the Commerce Ministry is considering interest subsidy benefits for textile sector including garments.

The interest subvention scheme of 3 per cent ended on March 31, last year. Under the interest subvention scheme exporters get loans at affordable rates.

Federation of Indian Export Organisations (FIEO) is demanding to extend the interest subvention scheme with retrospective effect from April 2014.

As textiles sector accounts for about six per cent of the country's total exports, there is a need to support this sector by providing credit to exporters at affordable rates, an official said.

Commerce Secretary Rajeev Kher has recently said that the ministry has completed discussions with the Department of Revenue and soon they would take the decision on the issue.

The proposal would also go to the Union cabinet for its approval.

In 2014-15, textiles exports grew by 12.28 per cent year-on-year to about USD 17 billion.

Loans at subsidised rates would help exporters to boost shipments as the country's overall exports were in the negative zone during the last six months.

Besides global slowdown, dip in oil prices and high interest rates are impacting exporters.

Earlier eight sectors including handicrafts, handlooms, carpets, sports goods, and few engineering products were availing the benefit of this scheme.

"Cost of credit is important for textiles sector as the exporters are facing stiff competition from countries such as Bangladesh and Vietnam. Government should give the interest subsidy benefits to them," FIEO Director General Ajay Sahai said.

Continuing its declining trend, India's exports shrank by about 20.19 per cent in May to USD 22.34 billion, marking a fall for the sixth straight month.

First Published: Tue, June 30 2015. 18:22 IST