The Indian textile industry is facing significant headwinds due to the country’s prevailing high-interest rate environment. This poses a major challenge to exporters, according to a senior government official.
The Director General of Foreign Trade (DGFT) has expressed concern over the difficulties encountered by the Commerce Ministry in persuading the Finance Ministry regarding the crucial role of the Interest Equalisation Scheme (IES) in maintaining the competitiveness of Indian textile manufacturers.
The IES is a crucial government program that provides exporters with subsidized interest rates on loans, making their products more competitive in the global market. However, the Finance Ministry has been reluctant to fully support the scheme.
Furthermore, the high demand for collateral by financial institutions presents a significant barrier for Micro, Small, and Medium Enterprises (MSMEs) within the textile sector. This stringent requirement severely limits their access to institutional finance, hindering their ability to expand their operations and enter the export market.
The government is actively working with the Finance Ministry to address these concerns and find solutions that will support the growth of India’s textile exports.
