New loans worth 10 to 30 billion rials ($285,000 to $857,000) from the government can help remove some of the problems facing manufacturers, said the deputy minister of industries, mining and trade.
In the latest meeting of the government's Economic Committee, it was decided that auto manufacturing units, especially those that produce capital goods such as trucks and buses, should be provided with financial resources, specifically in the form of usance, Tasnim News Agency quoted Mohsen Salehinia as saying.
Usance applies to items purchased on credit or a company's accounts. A company that purchases materials from a supplier will receive the goods today. The bill will be delivered today, but the company might have up to 30 days to pay it. The 30 days represent the usance for the sale.
Salehinia suggested that usance can also be used for purchasing auto parts and raw materials needed in auto manufacturing.
The official said a committee affiliated to the Central Bank of Iran, which is focused on removing obstacles hindering production, had previously decided that a yearlong usance should be used to help the auto sector.
The decision, however, was not executed due to financial constraints.
"In the latest meeting, it was suggested that the duration of usance be increased to two years," he said.
He added that the ministry agreed to increase the period to up to 18 months and that the amount of usance will be decided by CBI.
"We hope that the CBI will soon communicate the new decisions to all banks so that the automakers would be able to procure the raw materials they need as soon as possible," he said.
Salehinia noted that the Cabinet had decided that 10,000 industrial units should receive 160 trillion rials ($458 million).
"Small units are to receive 10 billion rials ($285,000) and medium-sized enterprises 30 billion rials ($857,000). Projects that are 60% complete are to receive 20 billion rials ($572,000)," he said.
The plan has been criticized on the grounds that such amounts are insignificant and will not solve the problems of manufacturing units.
The official, however, defended the scheme saying that "given the different needs of the units, the amounts that will be allocated can help remove some obstacles".
Salehinia said the manufacturing units are free to negotiate with banks to receive the loans.
