The Hindu : Tamil Nadu News : Cut interest rates on loans

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Tuesday, Nov 11, 2008
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Tamil Nadu

Tamil Nadu

Cut interest rates on loans

Staff Reporter

It is now 14 per cent per annum

It will help textile sector remain competitive
Increase duty drawback scheme by 5 per cent

Tirupur: The Tirupur Industrial Federation, a consortium of various textile associations, has asked nationalised banks to slash the interest rates on working capital and term loans to help the textile sector remain competitive amidst the recession in foreign markets.

The federation president, Ahill M.S. Mani, said that a reduction of at least 3 per cent from the existing interest rate of 14 per cent levied by the banks was essential considering the financial problems faced by the textile exporters after the sub prime crisis created an economic turmoil in the Western countries.

“An increase in the interest rates by 5 per cent over the last one year has thus put businessmen in the textile supply chain under enormous stress, who have already suffered huge losses owing to wide oscillations in rupee-dollar ratio since April 2007,” he added.

Power generation

Mr. Mani said that the Union Government should extend 5 per cent interest subsidy under Technology Upgradation Fund (TUF) scheme to textile entrepreneurs who were willing to set up wind mill projects for production of power for their textile units.

The move would help the industry reduce production losses incurred owing to prolonged loadshedding experienced during the last few months and also ease the depedency on the Tamil Nadu Electricity Board grid.

Duty abolishment

The TIF wanted the Union Government to exempt the import of spares for textile machineries from the purview of duties and ban the import of finished textile products, to make the sector vibrant. “At present, import duties levied on certain spares are as high as 60 per cent,” Mr. Mani said.

The duty drawback offered by the Union Government to exporters of cotton knitted garments should be increased from the present 8.8 per cent of free-on-board value by another 5 per cent.

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