Indian exporters receive more incentives
India has announced a third package of sops in less than a year for exporters in textiles, leather, handicraft and marine products sectors hit hard by sharp appreciation of the national currency Rupee.
Finance Minister Palaniappan Chidambaram said in Parliament on Thursday that customs duty on polyester staple fibre and polyester filament yarn has been reduced from 7.5 percent to five percent and on other manmade fibres from ten to five percent.
He also announced tax exemption on three more services besides enhancing interest subsidy for exporters in identified sectors.
The government will provide an additional two per cent interest subsidy to exporters of all categories of textiles excluding manmade fibre, leather, handicrafts and marine products for pre-shipment and post-shipment credit, Chidambaram said.
The government also added four more sectors; jute and carpets, cashew, tea and coffee, solvent extraction and de-oiled cake and plastics and linolen to the list of export sectors which are eligible for interest subvention under pre-shipment and post-shipment credit.
The coverage under a scheme aimed at promoting export of farm and village industry products has been expanded and the budget allocation doubled to Rs 600 crore.
The Indian Rupee has appreciated by 15.1 per cent against US Dollar since October 2006, seriously hitting exporters' earnings, especially those in labour-intensive sectors like textile and handicraft.
Chidambaram said leather, handicraft, marine products and textile sectors are particularly hard hit by the appreciating Rupee.
“Exporters and industry associations met the Prime Minister on the issue and I also had extensive meetings with them together with banks. Based on the meetings, we are now offering support to exporters”.
He said the government was sensitive to the pressures on these sectors and was conscious of the need to offer support to prevent job losses and to give time to these sectors to adjust to the changing economic scenario.
The Finance Minister, however, said appreciating Rupee has its upside also in terms of lower production costs in sectors involving imported raw material and intermediaries, lower oil import bill and lower cost of external debt servicing.
But the appreciating Rupee has put pressure particularly on those export sectors with low import intensity like textile, leather, handicraft and marine products, he pointed out.
The government has already announced two relief packages to exporters in July and in October this year. The first package had included reimbursement of excise duty, sales tax, interest subvention of two per cent, service tax refund in respect of port services, transport of goods, transport by railways and other port services.
The second package included service tax refund or exemption for three servicesgeneral insurance, technical testing and analysis and technical inspection and certification, interest payment on Exchange Earners' Foreign Currency accounts of exporters on outstanding balances subject to a maximum of one million dollars.