The government is expected to soon unveil yet another stimulus package for exporters, specifically in the labour-intensive sectors by the end of October which will include interest subvention and other incentives to push through their products in the tough global economic conditions.
The government is expected to undertake another review of the export-oriented sectors to undermine the problem areas. It had conducted a similar review earlier this fiscal.
“We will be announcing the incentives definitely by the end of October or first week of November,” Minister of Commerce and Industry and Textiles Anand Sharma told reporters on the sidelines of a meeting with the Indian industry leaders.
Exporters had been complaining about high interest rates and rise in the prices of commodities for a long time. Export credit has already crossed over 11.5 per cent and many banks are charging as high as 13.25 per cent.
The interest subvention is expected to be around two to three per cent. The incentive of two per cent interest subvention was withdrawn on March 31, as a result of which cost of export finance that was seven per cent last year has gone up to a level of 11-11.50 per cent.
The minister also said the ministry of finance has accepted the proposal and the Reserve Bank of India has been asked to notify the rates soon. Sharma also expressed serious concerns over the high cost of credit and the stance by Reserve Bank of India (RBI) in hiking the policy rates, which might affect the competitiveness of Indian industry.
“In my view, there has to be a rollback when it comes to cost of credit for the manufacturing industry. I have raised the issue with the finance minister. The cost of credit is making the Indian manufacturing expensive and globally uncompetitive. It would also affect in the long run our exports. These concerns have been fully registered,” he said.
Earlier in the week, Commerce Secretary Rahul Khullar had said the new package for exporters would look at all the issues concerning hike in interest rates and access to foreign currency denominated credit.
