Indian govt urged to announce amnesty for export obligation defaulters

Raising the interest benefit under the Interest Equalisation Scheme would help protect the knitwear industry, said TEA president KM Subramanian in a letter to the minister.

The Tiruppur Exporters’ Association has urged minister of finance and corporate affairs Nirmala Sitharaman to raise the interest benefit under the Interest Equalisation Scheme to 5 per cent across the board, announce an amnesty scheme to settle export obligation default and set up an infrastructure development fund for textile clusters in the next budget.

Some exporting units in Tiruppur have been finding it difficult to fulfil their export obligation for capital goods imported under Export Promotion Capital Goods (EPCG) scheme and raw materials imported under Advance Licensing Scheme within stipulated period due to the impact of the pandemic, a rise in yarn prices and the Ukraine-Russia war.

As the exporting units have to pay the interest apart from normal customs duty to regularise the case, the association requested the minister to announce an amnesty scheme to settle the issue.

The knitwear exporting units in the Tiruppur cluster are now facing a severe threat to their existence due to issues like low orders, delay in receiving payment, non-acceptance of booked orders, and deferment of shipment, Subramanian wrote.

The association suggested that the Export Refinance Scheme should be extended to banks to augment export credit, and banks may be encouraged to provide export credit in Indian rupee to exporters and the same amount can be refinanced by the Reserve Bank of India at the repo rate.

“There is no doubt that such a mechanism will bring down the interest cost for export credit providing much needed competitiveness to our exports,” the letter said.

The association called for a specified scheme for micro, small, and medium enterprises (MSMEs) under the Emergency Credit Line Guarantee Scheme (ECLGS). It said 10-20 per cent of the existing credit should be immediately offered to bail out the knitwear garment sector as many units are finding it difficult to service their loan to banks and sustain in the business.

It also requested the minister to announce 1 per cent of export turnover of garment clusters for an Infrastructure Development Fund.

Fibre2Fashion News Desk (DS)