The Hindu Business Line : Exporters get interest relief on credit, higher refunds

The Package
Two percentage point interest relief to exporters to cost about Rs 500 crore to exchequer
Increase in all industry drawback rates of most items; increase to be applicable retrospectively
Speedy release of deemed export benefit claims facilitated

Our Bureau

New Delhi, July 12

The Government on Thursday unveiled a ‘relief’ package for exporters reeling under the relentless rise of rupee vis-À-vis the US dollar in recent months, with special focus on sectors that have been affected the most by rupee appreciation.

The Finance Ministry’s package essentially comprises three components –— interest relief on export credit, which means that the Government will bear interest cost to the extent of 2 percentage points , increase in duty drawback rates in nearly all items and an administrative action to enable the Commerce Ministry to expeditiously settle deemed export benefit reimbursement claims.

Announcing the features of the package, the Finance Secretary, Dr Duvvuri Subbarao, said that the Government has been especially “sympathetic” to sectors that are less import intensive and are unable to take advantage of cheaper imported inputs, but have high value addition possibilities.

Interest subvention

Explaining the interest subvention measure, Mr Vinod Rai, Secretary (Financial Sector), said that all exporters in nine identified sectors would get 2 percentage point interest relief on both post-shipment as well as pre-shipment credit. The subvention would be provided by the Government to the banks through the Reserve Bank of India.

The nine sectors are textiles (including handloom), readymade garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods and toys.

Also, all exporters from the small and medium enterprises (even those outside the identified nine sectors) would be entitled for the 2 percentage point subvention on pre-shipment credit up to 180 days, as well as post shipment credit up to 90 days for the period April-December 2007. The 2 percentage point subvention would in all cost about Rs 500 crore to the exchequer, Mr Rai added.

The Revenue Secretary, Mr P.V. Bhide, said that the Finance Ministry has worked out the revised All Industry duty drawback rates for 2007-08 and would be notified shortly. He said that the drawback rates have been increased in nearly all products and the increased rate of drawback would take effect from April 1 this year.

Additional lines

Responding to exporters’ requests, he said that some additional lines have been introduced in the drawback schedule. These include leather-cum-synthetic textile, footwear upper, coir mats, handicrafts/artware of stainless steel, and certain dye and dye intermediates.

In a few cases such as primary steel, dyes and chemicals, the drawback rates have been reduced taking into account the reduction of duty on inputs. The reduced rates would be effective prospectively from the date of issue of notification.

Commenting on the administrative measure, Dr Subbarao said that the Finance Ministry has relaxed the monthly and quarterly ceiling on expenditure, thereby enabling the Commerce Ministry to meet in full the pending reimbursement claims to the tune of about Rs 600 crore in respect of deemed export benefits.

The Finance Secretary pointed out that the rupee had appreciated only with reference to the US dollar and not with other currency like the euro.

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Exporters get interest relief on credit, higher refunds