Apparel exporters to get 2% interest subsidy

Press Trust Of India / New Delhi October 13, 2009,

Following a rise in garment exports in
September for the first time
since April this year, the government
has decided to give
exporters 2 per cent interest subsidy
on shipments.



The government had earlier announced a 2 per cent interest
subsidy to certain labour-intensive sectors like handicraft,
marine and textiles. However, garment exports were not
included in the list for the fiscal benefit.

Following a communication from the finance ministry, t
he Reserve Bank of India (RBI) in a notification said:
“Banks may pass on the benefit (2 per cent interest subsidy)
to all eligible (garment) exporters....”

It said the benefit would be
effective retrospectively from December 1, 2008,
and would remain in force till March 31, 2010.

Garments exports, which
had seen a decline since April 2009, managed to
register an annualised
growth of 1.39 per cent, to $876 million, in August.

“We are getting orders for the summer season. We are hopeful that
the positive trend will continue in the current financial year as the
exporters are now giving orders,” Apparel Export Promotion Council
Chairman Rakesh Vaid said.

President of the Federation of Indian Export Organisations
A Sakthivel said lowering of interest rate through subvention
would give respite from recent appreciation of rupee against the
dollar, which had lowered exporters’ realisations.

Garments exports declined by an average of 9.5 per cent in the
first four months of 2009-10 due to a slump in demand from
the US and European markets.

The US and Europe collectively account for 70 per cent of India’s
apparel exports, which are close to $10 billion.

The $63-billion Indian apparel and textiles industry is the
second-largest employment generator after the agriculture sector,
which employs about 35 million workers.