Govt mulling interest rate sops to leather industry
The commerce ministry has circulated a draft note on providing benefits of interest subvention scheme to exporters and the cabinet is expected to take a decision on the sops by the end of this month, an official said.
Under the interest subvention scheme, exporters get loans at lower rates. A similar scheme of 3 per cent interest subvention ended on March 31 last year.
Exporters' associations like FIEO have been demanding extension of the scheme with retrospective effect from April 2014.
Speaking on the importance of interest rate sops to the leather industry, the official said that the sector is labour intensive sector and affordable credit will help boost exports.
Council for leather exports chairman Rafeeq Ahmed said that the sector on the export front has not done well and given its labour intensive nature, the government should "immediately provide interest subsidy benefits to us".
"During April-June quarter, leather and leather goods exports declined by about 5 per cent. Order books too are not good. Interest subsidy benefit will help leather companies to boost production and exports," Ahmed said.
Many companies in the leather sector are major suppliers of global brands like Red Tape and Oaktrak. Companies such as Mirza International meet outsourcing need of global retailers and derive about 75 per cent of their revenues from exports.
Loans at subsidised rates would help exporters to boost shipments as the country's overall exports were in the negative zone during the last six months. India's exports dipped for the sixth month by 15.82 per cent in June to USD 22.28 billion due to global slowdown.
In 2014-15, leather and leather product exports were valued at about USD 6 billion.
Earlier eight sectors including handicrafts, handlooms, carpets, sports goods, and few engineering products were availing the benefit of interest subvention scheme.