Rupee Appreciation
India allocates Rs 1400cr to compensate exporters
Pallab Bhattacharya, New Delhi
Faced with serious problems in exports triggered by a sharp rise in Rupee value, Indian government on Thursday came out with a Rs 1400-crore relief package to exporters. Under the package, exporters will get bank loans at cheaper rates and increased refunds of local taxes. The package was aimed for job-creating sectors like textiles, garments, leather, engineering goods, toys and sports goods which corner a major share of the sops announced by the Finance Ministry. The Indian currency has appreciated by ten percent against the US dollar in the last four months, drawing repeated demand from exporters for relief. Under the package, there will be a two percent interest subsidy for all pre-shipment and post-shipment loans taken by exporters from state-owned banks between April and December this year, Finance Secretary D Subbarao told reporters here. This will benefit exporters in textile, handicraft, engineering products, processed agricultural products, marine products, sports goods and all small and medium enterprise sectors. The move is expected to cost the state exchequer about Rs 500 crore but is likely to help small exporters overcome cash crunch. The government also announced that the export duty drawback rates, a duty remission scheme, have been increased across sectorsby ten per cent to 40 per cent and the hike is effective from April this year. This is expected to result in a loss of Rs 800 crore in revenue to the government. In another incentive for exporters, the premium for the cover provided by Export Credit Guarantee Corporation has been brought down by ten percent. Textiles, bicycle and stainless steel are some of the goods where duty drawback rates have been enhanced. Following requests by exporters, some additional product lines have also been included in the drawback schedule on some labour-intensive items like leathe-cum-synthetic, footwear and electrical apparatus. Commerce and Industry Minister Kamal Nath said in a statement on Thursday that the relief package for exporters would neutralise the adverse impact of rising rupee on exports. The finance secretary said the package would enable the country to meet the 2007-08 export target of 160 billion dollars and there was no reason to apprehend that the target would not be achieved. Indian exporters' groups have welcomed the package but wanted more.
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