This has led to the loss of competitiveness in the global market for the garment and knitwear export sector, as they struggle to seek funds to meet their capital needs. Many garment manufacturing units have quickly been classified by banks as non-performing assets, because they are unable to repay their loans.
The Chairman of the Apparel Export Promotion Council (AEPC) of India, Mr. Saxena, wrote to the Union Finance Minister Mr. Mukherjee raising this concern. He emphasized that the reality is that this sector has lost its competitiveness in the global market due to rising interest costs. He appealed to Minister Mukherjee to take appropriate action to restore the competitiveness of the garment sector. He sought financial restructuring and a 2% export credit subsidy extension for the garment and knitwear sectors.
Mr. Saxena reiterated his request to Minister Mukherjee to extend these measures across the entire textile value chain, from contract workers to upstream large-scale sectors. The AEPC believes that this proposal has no revenue implications, as interest payments on all loans will continue.
Rising interest rates have almost devastated India's garment and knitwear export sector. The Indian garment and knitwear industry has been hit by weak exports to the U.S. and UK markets, and rising interest rates have made loans more expensive, further destabilizing the sector.
1) Extend the principal repayment of long-term loans by 24 months with no asset classification or near terms, including loan re-structuring;
Mr. Saxena requested the Ministry of Finance to support the following measures:
2) Working capital deterioration caused by sharp increases in raw material and finished goods prices can be converted into working capital loans with a five-year term and deferred repayment for one year.
3) Include the garment and knitwear export sector in the 2% export credit subsidy scheme.
The Apparel Export Promotion Council of India says that these actions will help the garment and knitwear sector, including those dyeing units.