The Interest Equalisation Scheme announced by the Government will provide the much—needed boost to exports of cotton textiles, Cotton Textiles Export Promotion Council (Texprocil) Chairman has said.

The much—awaited Interest Rate Subvention Scheme on pre—shipment and post—shipment schemes has been approved by the Cabinet Committee on Economic Affairs last week.

The scheme, which will now be called as Interest Equalisation Scheme, will be effective from April 1, 2015 for a period of five years. It will be evaluated after three years.

“The scheme will provide the much—needed boost to exports of cotton textiles as all categories of fabrics and made—ups have been covered under the scheme”, Texprocil chairman R K Dalmia said in a statement issued here.

Interest rate on export finance is very high in India as compared to competing countries like Bangladesh, Pakistan, Sri Lanka and Vietnam. And exporters were keenly looking forward towards the announcement of this scheme as they are facing depressed market condition and declining exports.

The scheme has however excluded cotton yarns. Further, the scheme is also not made available to the merchant exporters.

Dalmia pointed out that cotton yarn export is currently reeling under difficult market conditions, especially in China and this product should be covered under the scheme to enable yarn exporters to reduce costs and remain competitive in these difficult times.

He said, in the present business scenario, the differentiation between manufacturers and merchant exporters is diminishing and there is no reason as to why merchant exporters should be denied the benefit of concessional rate of interest on export finance as long as they contribute towards exports.

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