The Federation of Indian Export Organisations (FIEO) has appealed to the Centre to extend the stimulus for exports at least one and a half years. FEIO, in its representation to the Centre, argued that while growth in exports in last three months was a good sign, this was more on account of low base effect.
Therefore, while determining whether a sector has done well or not, reference point should be the year when the sector was doing well, it said. FIEO president A Sakthivel said a comparison of present exports with the exports of 2007-2008 should be a reasonable indicator.
Second, many of the sectors have shown positive growth due to stimulus provided by the government and in case of abrupt withdrawal of stimulus these sectors might again enter into negative territory.
Sakthivel said that the cost of stimulus given to exports as a percentage of total exports is miniscule. Stimulus to the export sector was primarily in the form of 2% interest subvention, high duty entitlement pass book (DEPB) and Duty Drawback and refund of services tax on 19 services.
Sakthivel suggested that “Interest subvention needs to be continued for at least one and half year looking at the high cost of credit in India as compared to our competitors. Many of our competing countries are getting credit at sub 5% rate which has become all the more relevant in a scenario where buyers are asking for longer period of credit.” He added that due to appreciation of Rupee, the Government in any case will save in DEPB and Duty Drawback allocations as these benefits are given on the FOB value in Indian Rupee.
The refund of service tax is still beset with problems and therefore, the exporters should be given exemption from service tax demanded Sakthivel.
Sectors which have not done well like textiles, engineering, carpets, handicrafts, leather, jute manufacturing needs to be given additional support as these sectors will be under further pressure due to appreciation of currency. These are the high employment generating sectors and we have to ensure that these sectors do well not only from the point of view of exports but more so due to employment perspective.
