AEPC: Garment industry gets relief as interest subsidy extended for MSMEs

The garment industry association, AEPC, chairman, SudhirSekhri, hailed the government's decision to extend the Interest Equalization Scheme (IES) for two months, specifically for Micro, Small & Medium Enterprises (MSMEs). This scheme subsidizes interest rates on pre and post-shipment rupee export credit.

Sekhri emphasized that the extension provides much-needed relief for MSMEs struggling with high-interest rates and sluggish exports in labor-intensive sectors. However, he called for a more stable and predictable policy environment.

Sekhri argued that policies and schemes should be in place for at least five years, allowing businesses to plan and strategize for the long term.

Previously, the IES offered a 3 per cent interest rate reduction for MSME manufacturers exporting any product and a 2 per cent reduction for other manufacturers and merchant exporters dealing in 410 specific product categories. The extension applies only to MSMEs, with a total budget of Rs750 crore for the two-month period.

While the garment industry celebrates this short-term win, some exporters have expressed disappointment. They argue that excluding non-MSMEs from the scheme could negatively impact labor-intensive exports and large companies involved in the specified 410 product lines.