The Reserve Bank's decision to extend the scheme providing interest subsidy for post and pre-shipment export credit till March 31, 2021 will help apparel sector to access cheaper loans, AEPC on Friday said.
Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said that with the current uncertainty of rupee exchange rate vis-a-vis other currencies, taking rupee loan on packing credit lowers down exporters' interest burden and removes the need for taking a risk on foreign cover.
"It was the need of this hour of crisis. It will help apparel exporters gain access to cheaper loans," he said.
Exporters get subsidy under the 'Interest Equalisation Scheme for pre and post shipment Rupee Export Credit'.
The scheme which was to end on March 31 this year has been extended till March 31, 2021.
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In November 2018, the interest subsidy was increased to 5 per cent from 3 per cent with the aim to boost MSME sector exports.
Later, the government included other merchant exporters too under the scheme and allowed them interest equalisation at the rate of 3 per cent on credit for export of certain products.
Exporters had been demanding extension of the scheme, particularly at a time when they are facing huge problems due to the COVID-19 crisis.
Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai called the extension of scheme a huge relief for exporters as the cycle of exports has elongated with slowdown in demand and liquidity.
India's exports dropped by a record 34.57 per cent to USD 21.41 billion in March, while it declined by 4.78 per cent to USD 314.31 billion for 2019-20.
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