TEXPROCIL hails inclusion of merchant exporters under IES

The Cotton Textiles Export Promotion Council (TEXPROCIL) has welcomed the decision of the Cabinet Committee on Economic Affairs for including merchant exporters under the Interest Equalisation Scheme (IES) for pre and post shipment rupee export credit. However, it has urged the government to include cotton yarn under the scheme to encourage its exports.

“This will significantly reduce the cost of finance for the merchant exporters who contribute substantially towards textiles exports and make them more competitive,” TEXPROCIL chairman Dr. KV Srinivasan said in a press release.

IES at 5 per cent is available for pre-shipment and post-shipment credits on exports of all products manufactured and exported by MSMEs, and 3 per cent on 416 specified tariff lines for non-MSMEs. However, till now the scheme was available only to the manufacturer-exporters and not to the merchant exporters.

Srinivasan pointed out that both manufacturer-exporters as well as merchant exporters require finance to execute export orders and the decision has therefore come as a huge relief for the merchant exporters as the cost of export finance will come down substantially.

MSMEs constitute a significant part of the textiles sector and play a crucial role in textiles exports. However, MSMEs do not have the expertise and resources to market their products in the export markets unlike the large manufacturers. They, therefore, depend on the merchant exporters to export their products. The coverage of merchant exporters under the IES will encourage them to export more products from the MSME sector which contributes significantly towards employment generation especially for women, said Srinivasan.

He urged the government to cover cotton yarn under the scheme, as it is the only textile product which has not been given any benefits under the Foreign Trade Policy although it is a value-added product with substantial value addition taking place within the country. “The inclusion of cotton yarn under the scheme will encourage exports of this product which in turn will benefit the cotton farmers,” he added.