India'S Textile Industry Requires Banks To Continue To Provide 4% Interest Rate Subsidies.

Mr Kamal Nath, Minister of Commerce and industry of India, sent a letter to India's prime minister, Dr Manmohan Singh, who asked for a 4% interest rate subsidy for textile exports. Although rupee fell more than 11% against the US dollar since the beginning of the year, several problems still beset the prospects of the textile industry.

In the first half of last fiscal year, the interest subsidy for textile (including hand loom) and garment export business was 2% before shipment and after shipment. From November 1, 2007, interest subsidies for all textile and carpet enterprises increased by 2%, excluding man-made fibres. Before March 31, 2008, the rupees steadily appreciated, and 4% interest rate subsidies continued until the end of September 2008. The central bank announced that it had stopped its recent monetary and credit policies, taking into account the central bank policy and caused the textile industry to beat the breast. Now banks hope to continue to provide interest subsidies and raise the export tax rebate rate.

Mr Rakesh Vaid, chairman of the AEPC, submitted a memorandum to the finance minister, Mr P. Chidambaram, on Tuesday to list some of the reasons for the rapid decline in textile exports this year.

He said that the clothing industry absorbed a large number of uneducated and unemployed people. They came from the countryside. The clothing industry is the only one. The government must realize the difficulties faced by the clothing industry.

From 2004 to 05, India's textile exports amounted to US $14 billion 30 million and the 2007 to 08 years expanded to 20 billion 250 million US dollars. India hoped that textile exports would develop greatly after the post quota period after 2004. However, this desire has basically become a mirage. Many unfavorable factors have eroded the competitiveness of India's textile industry. India has lost to China, Pakistan and Bangladesh in terms of price and quality. The US market share of these countries has steadily increased, and the United States is a major market in India.

According to informed sources, textile exports increased by 9.4% in the 2007-08 dollar terms, and increased by only 1.5% in the first 7 months of the last fiscal year.

As a result of early measures, the export slide was stopped, including the revision of export tax rebates, and the interest rate subsidies provided to exporters when the rupee appreciated substantially.

In the first half of this year, India's market share in the United States and developed countries has shrunk, even though Bangladesh has surpassed India for the first time. Meanwhile, low cost competition countries in the subcontinent and China's exports have been supported. This shows that India has every reason to provide interest rate subsidies.

Pakistan earlier cancelled 6% of R & D subsidies, but now the clothing industry has received R & D subsidies.

China has recently announced the export rebate rate of textiles, pesticides and other commodities, which has been implemented since August 1, 2008.

The export rebate rate of textile and clothing increased from 11% to 13%, and China's textile industry will get an additional profit of 2 billion 600 million dollars.

Mr Vaid asked the government to reconsider the interest subsidy that ended at the end of September 2008.

Because the high-end clothing industry in India needs to purchase high-quality raw materials at high price, now it is a period of high inflation, and the cost of production inputs is rising, including electricity and other necessary production components.

He said that 3/4 of the garments exported were based on cotton, but the price of raw cotton was very high. The Committee requested that the export rebate rate of cotton garments should be raised to 14%, so as to help the garment industry to reverse the export slide.