Identify sector wise requirements

Export oriented handicraft items include carpets, shawls, paper-machie, walnut-wood, khatamband, crewel, chain stitch, tapestry, cotton made ups, leather, copperware, silverware and costume jewellery. The sector has different players at every stage of production and marketing, making the financial requirement different at various stages.
Invariably in all categories, the artisan level is in severe need of financial assistance. The wholesaler who provides the raw-material to the artisans comes next. The requirements at this stage can be provided by banks through artisan credit which has been made easier by provision of guarantee scheme of the Government of India, Ministry of Textile. Mass awareness regarding this facility needs to be created by the banks.
Requirement of finance for wholesalers is different depending on the product manufactured. The need of finance for manufacturing a high-knottage silk carpet is different than manufacture of a low-knottage carpet. The requirement of finance will also be determined by time taken for manufacturing the product.   
Once goods are manufactured, the artisan and wholesalers will have different financing and marketing needs. This will also depend on whether the marketing is done nationally or internationally. In the case of handmade carpet of high-knottage, besides the high cost of raw-material, the time taken for manufacturing has also to be taken in account besides the fact that it has to be marketed internationally.
Pre-Shipment Credit Limit (PCL) should be increased to two years keeping in view time taken in production of carpets, particularly of high-knottage, which is our forte in the carpet industry. It is also important that banks extend credit at lesser rate of interest, equivalent to the rates to agriculture loans which at present is 7 percent. One fact that has to be kept in mind is the competition posed by Iran and Pakistan where rate of interest is much lesser.  There is a need of inventory financing by banks so that our exporters do not indulge in distress sale to liquidate their stocks. It is suggested that for our state inventory lying with exporters, traders of handicraft, working capital loan be turned into term loan with a moratorium period of one year and the holding of stock for a low rate be paid only after moratorium period is finished, in installments.  Crystallisation of export bills received by banks be suspended by one year and alternatively increase the crystallization from 30 to 90 days.
(The writer is president KCCI and owns a chain of handicraft showrooms abroad.)


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