Tamil Nadu

Job-working units urge Centre to reduce interest rates

Staff Reporter

TIRUPUR: While welcoming the Centre’s decision to reduce interest rates on export credit and increase duty drawback rates to offset the fall of the US dollar, the Tirupur Industrial Federation (TIF), an umbrella organisation of job-working units, deplored that the Centre’s package had not benefited them.

In a statement, TIF president Ahill M.S. Mani said the job-working units were the backbone of export growth, but they had been left out in the package.

In garment production, 80 per cent of the work had been executed by the job-working knitting, embroidery, compacting, raising, dyeing and printing units.

Mr. Mani said the units had invested crores of rupees by borrowing from banks to increase their production capacity anticipating huge export orders.

Unfortunately, the machinery had been under-utilised following large-scale import of ready-to-cut fabric from China by exporters and raising cost of inputs.

He said the sudden hike in interest rates by banks to 14 per cent from nine per cent had compounded the problem of the units.

The banks had been levying the revised interest rates for the last six months. Further, the interest and capital subsidy under the Technology Upgradation Fund Scheme was not extended to the units properly for the last two years.

While the export units were affected directly owing to strengthening of rupee, the job-working units were indirectly hit.

Mr. Mani said the account of many job-working units would turn into non-performing assets.

He said majority of the units had been struggling to repay the loans.

Mr. Mani urged the Governments to take steps to save the ailing units by way of reducing interest rates, electricity charges and increasing benefits under the TUFS.

He sought reduction of import duty on machinery and spare parts.

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