NEW DELHI: More sops may be in store for exporters, especially in sectors like textiles, gems and jewellery, chemicals and handicrafts, which
have been worst hit by the on-going slump and credit squeeze across the world.
A committee comprising secretaries of revenue, finance and commerce departments will look at problems faced by exporters and devise a strategy to sort them out.
According to commerce and industry minister Kamal Nath, more sector-specific measures could be announced for exporters in 10 to 12 days. The minister also acknowledged that the export target of $200 billion set for the current fiscal will not be met.
Mr Nath, Planning Commission deputy chairman Montek Singh Ahluwalia and top officials from the commerce and finance departments met exporters and industry representatives from various sectors on Wednesday to analyse the effects of the stimulus packages already announced by the government and to find out what more was needed to be done.
Faced with declining export orders and demand for longer credit period by buyers, exporters have made a case for more sops from the government to enable them to maintain an edge over their competitors.
According to the Federation of Indian Export Organisations (Fieo), China, Pakistan and Bangladesh have given additional benefits to their industry in the form of higher VAT rebate for exporters and support in the form of a R&D facility, which allows them to price their products lower than India’s.
FIEO has demanded that the government should increase drawback and DEPB rates (schemes to reimburse duties on inputs paid by exporters) by 3-5% till December 31, 2009.
Interest rate subvention (discount) of 2% presently available to five sectors should be extended to tea, basic chemicals, engineering goods, jute, plastics and linoleum, it said.
Post-shipment credit, which is currently available for only up to 180 days, should be provided at least for a tenure of 365 days keeping in view the financial crunch faced by overseas buyers, FIEO said, demanding a longer credit period.
Industry body Ficci has made a case for fresh external commercial borrowings (ECB) to be permitted for repayment of existing term loans/working capital for all exporters. For this, existing guidelines may be modified in respect of end use for ECBs so that such proceeds can be used for retirement of rupee loans taken already.
Other demands made include exempting exporters from paying fringe benefit tax (FBT), expeditious formulation of a mechanism for refunding state/local levies and duties, increasing accessibility to credit by preventing banks from adopting an overcautious approach and restoring income tax exemption on export profit.
Source : The Economic Times