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, the 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.
