Press Information Bureau

Government of India

Ministry of Commerce & Industry

19-November-2011 17:12 IST

Government is actively seized with the concerned being faced by the handloom sector which employs 43 lakh weavers.  In recent times, this sector has come under stress on account of high yarn prices and stiff competition from power loom and mill sector.  Apart from this, access to credit is not easily forthcoming.  The bulk of handloom industry weavers are from UP, West Bengal, Orissa, North East and Southern belt, large number of which belong to the minority community and women.  A focused attention to this sector is, therefore an imperative from the stand point of our ‘inclusive growth’ agenda.

Loan waiver for handloom weavers

On assuming charge of the Ministry of Textiles, Shri Anand Sharma had taken a comprehensive review of this sector. In the Budget 2011-12, the Government had announced a loan waiver package of Rs. 3,000 crores, which was expected to benefit 15,000 handloom weavers cooperative societies and 3 lakh handloom weavers, who had been unable to repay their loan on account of economic difficulties.  However, a large number of weavers of U.P. who operate on an individual basis and are not organised in the cooperative sector, were left out of its ambit.

A meeting of Expenditure Finance Committee (EFC) was held yesterday and a decision of covering individual weavers also, a large number of whom are from UP, will be sent for consideration of the Cabinet.

Comprehensive package for weavers.

While the loan waiver package cover the needs of loan defaulters, but the large number of individual weavers who are facing stress economic conditions also needs support.  A 6 fold strategy has been prepared as part of the Handloom Package.

a) Weavers’ Credit Card - will be issued to eligible individual weavers who will be able to access loans upto Rs. 2 lakhs and generally in the range of Rs. 35,000 to Rs. 50,000/-  for a period of 3 years without any collateral security. The scheme has been finalized and the banks would be advised for its implementation.

b) Interest Subsidy – cost of credit has been unduly high and we have recommended interest subsidy of 3% to enable weavers to access loan at 7-8% interest for 3 years.

c) Margin Money – assistance of Rs. 4200/-  to 5400/-  per weaver has been proposed which will provide them leverage for borrowing loans.

d) Credit Guarantee - Loans extended by banks will be guaranteed by the Credit Guarantee Fund Trust for medium and small enterprises to the extent of 85% of their outstandings.

e) Price subsidy of 10% is proposed for yarn supplied by the National Handloom Development Corporation and agencies proposed by the State Governments in order to overcome the problem of yarn supply.

f)  Enhanced rate of freight reimbursement will be provided for cotton, jute and silk yarn between 2.5% to 10% for deliveries across the country. This will ensure that yarn is easily available at affordable prices to different handloom clusters across the country. Over the 12th Plan period, these measures will benefit 13 lakh handloom weavers and their societies, of which an estimated 2 lakhs weavers come from UP.

DS/ST/GK

Weavers' Relief Package expands credit access and subsidies to individual handloom weavers, enabling collateral-free loans and interest support. The package extends loan waiver coverage to individual handloom weavers and implements a sixfold strategy: a Weavers' Credit Card for collateral-free loans, an interest subsidy to lower borrowing costs, margin money assistance to leverage lending, credit guarantee coverage for bank loans, a price subsidy on yarn procured through designated agencies, and enhanced freight reimbursement to improve yarn availability and affordability across handloom clusters.