NEW DELHI: The ministry of textiles has asked the government to extend the interest subsidy scheme for garments exports for another year as has been done for handicrafts, carpets and small & medium enterprises (SMEs). The government has in the Union Budget for 2010-11 proposed to extend the interest subvention scheme for one more year till March 31, 2011, for select sectors like handicrafts, carpets, handlooms and SMEs.
With a view to insulate the employment-oriented sectors like leather and textiles, including handlooms, handicrafts and carpets from the impact of demand slowdown, the government had earlier extended the interest subsidy scheme, for concessional export finance in the last Budget till March 31, 2010.
Under the scheme, banks provide loans at 2% lower than the market rate to the sectors eligible for interest subvention. The Textiles Ministry recently wrote to the Finance Ministry for continuation of the subsidy to garment exports sector as well. The scheme is to expire on March 31, 2010.
“We have already taken up with the finance ministry the point relating to more provisioning of funds by it to the commerce ministry so that the requirements of the Indian garment manufacturers could be addressed through the Budget instruments of the commerce ministry,” secretary in the ministry of textiles Rita Menon said. The ministry is also taking up the matter with the commerce ministry, Mrs Menon added.
The garments export, which had started declining in October 2008, had shown some initial signs of recovery in November 2009. But in December 2009, it again declined by over 11% to $ 862 million due to lower demand from the US and EU, which together account for 70% of India’s garments export. The apparel exports industry provides employment to about 3.5 million workers directly and another three million indirectly.
Source : The Economic Times