SME Times News Bureau | 03 Dec, 2011
The Cabinet Committee on Economic Affairs (CCEA) Thursday approved Rs 2,500 crore additional funds to banks to give two percent interest subvention on rupee credit to labour intensive export sector.
While thanking CCEA, Ramu S Deora, President FIEO said, this would enable labour intensive sectors such as handicrafts/ handlooms/ carpets and small and medium enterprises (SMEs) to not only withstand the scenario due to the existing slow-down in advanced economies but making their products competitive in an otherwise high interest regime domestically.
The scheme was introduced in July 2007 to help exporters offset losses on account of global recession. In this scheme, operated by the RBI, the government gives interest subvention of two percentage points per annum to all scheduled commercial banks in respect of rupee export credit to the specified categories of exporters.
He stated that the scheme should be extended to all sectors of export as subsequent hike in the base rate has pushed the cost credit by over 60 percent in last 17 months for exporters not covered by subvention benefits.
Deora urged the Government to provide export credit at 7 percent so as to impart competitiveness to exports in view of difficult global scenario which will impact demand and remittance period is going to be longer.
