‘Two per cent reduction in interest rate on export credit yet to become a reality’
COIMBATORE: The Southern India Mills’ Association has deplored the reduction of Duty Entitlement Passbook Scheme rate for cotton yarn.
A release from the association said the Centre enhanced the rates to five per cent from two per cent recently. Now, it was reduced to three per cent.
“The reduction in DEPB rates is a jolt to the exporting mills who are already reeling under tremendous pressure due to strengthening of the rupee, increase in input cost and poor market conditions,” the release said.
Since October 2006, rupee had appreciated by 13.5 per cent against the dollar and “every percentage appreciation has affected the profitability of the mills.”
Additional benefit
The industry had been seeking enhancement of benefits to help the mills fulfil the agreed export contracts. In such a scenario, “the industry is shocked because of the sudden decision taken by the Government to withdraw the additional benefit given under the DEPB scheme.”
Further, the two per cent reduction in interest rate on export credit was yet to become a reality since the banks were waiting for official communication.
The increase in bank interest rates, hike in cotton prices and high power tariff were all affecting the competitiveness of the mills.
The association appealed to the Government to “immediately restore the DEPB scheme rate for cotton yarn as per the earlier notification and safeguard the survival of the spinning sector failing which the working performance of the mills will be severely affected.”
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