Exporters may get sops against Re rise

Concerned by the effect of the appreciating rupee on exports, the commerce ministry today said it would ask its finance counterpart to implement a series of measures, including increase of drawback rates and reducing interest rates on export credit, to help exporters cushion losses.

The commerce ministry has also decided to decrease the premium for export insurance cover as well as speed up the clearance of terminal excise duty and central sales tax reimbursements to exporters.

Aware of the fact that the finance ministry has repeatedly turned down demands for additional sops in the past, Commerce Minister Kamal Nath said he was determined to push ahead with the relief measures that were discussed at a meeting he had with the export community today.

"If the two ministries disagree, there is a system in the government and we would resort to that if need be. This includes discussing the matter in the Cabinet," he said.

A government official present at the meeting added that Nath was intent on getting the measures implemented. "The minister assured exporters that he would also discuss the recommendations with the Prime Minister," he said.

The package includes increase of the duty drawback and Duty Entitlement Pass Book schemes by 5 per cent. "Currently, the average rates for DEPB is 7 per cent and for duty drawback is 11 per cent. An increase in these rates will defiantly help the exporters cushion their losses," said Ajai Sahai, director general of the Federation of Indian Exporters Organisation (FIEO)

Moreover, the commerce ministry is also recommending renewing the practice of providing interest on export earners' foreign currency accounts, a practice which was stopped in 2000.

The commerce ministry will also request its finance counterpart to reduce the rate of interest on pre-shipment and post-shipment credit to 6 per cent. Currently, the rate of interest for export credit is in the range of 9-11 per cent. It also wants banks to stick to the mandated 15 per cent export credit disbursement target for the year.

On its part, the commerce ministry will ensure that all arrears related to reimbursement of terminal Excise Duty and Central Sales Tax would be cleared by June 30.

"Usually, it takes up to an year to get these reimbursements," said Ganesh Kumar Gupta, president of FIEO. Moreover, the Export credit Guarantee Corporation will also reduce its premium rates on insurance of export consignments by up to 10 per cent.

To asses the real impact of the rupee appreciation on exports, Nath today also formed a committee, comprising members from department of commerce, textile ministry, Directorate General of Foreign Trade and Indian Institute of Foreign Trade.