The Tirupur Exporters Association (TEA) has urged Union finance minister Nirmala Sitharaman to extend the interest subvention scheme for post and pre-shipment export credit.

The Centre offered 5% interest subvention for MSMEs and 3% for non-MSMEs on the loans over the last five to six years. The interest equalisation scheme was up to September and the Centre didn’t extend it.

“While 95% of the readymade garment exporting units are in the MSME sector, interest subvention is essential to sustain in the business at a time when raw material prices, accessories and job working charges have increased significantly,” TEA president Raja M Shanmugam said on Wednesday.

“While the interest rate in banks is around 7-8%, it is much lower in countries like Bangladesh and Myanmar, which are competitors in textile export. Interest subvention created a level-playing field for MSME exporting units. Competing countries are also enjoying the duty-free status in EU and UK markets unlike India,” Shanmugam said.

As there was no announcement on interest subvention after September, banks started collecting full interest, Shanmugam said and sought extension of the scheme with retrospective effect from 1st October for another two years.

Published On : 02-12-2021

Source : The Times of India