The Hindu Business Line : Ministry seeks extension of low interest to exporters

New Delhi, March 7 The Department of Commerce is pitching for continuation of reduced export interest rate of seven per cent particularly to traditional segments such as marine products, textiles, handicrafts and leather for another year beyond end-March 2008 as this would provide some succour to them.

Talking to Business Line here on the demands of exporters and the disgruntlement being felt by them in the Budget 2008-09 which has bypassed their core concern, the Commerce Secretary, Mr Gopal K. Pillai, said that, as it is, many costs of manufacturer-exporters had gone up such as power and freight, over and above the rupee appreciation. .

Plea for reliefs

He said that the department is pleading for reliefs such as reduced interest rate and enhancement in the rates of Duty Entitlement Pass Book (DEPB) to employment-intensive export sectors only, where if the margin is reduced to meagre level, the exporters could not be left with any funds for further investment and expansion of his operation.

For this, “we are committed to the conviction that no taxes are exported”. He said that where the margin is thin at five per cent in exports, if tax burden of 7-8 per cent is super-imposed, “they get wiped out”.

Trade facilitation

Mr Pillai said that is why the Commerce Ministry is focussing more and more on trade facilitation particularly in the light of the fact that some of the export promotion schemes might get axed over the years.

Meanwhile, at least refund or reimbursement of taxes borne by the exporters could be expedited by way of some relief to exporters, he said.

With the modifications or annual supplement to the Foreign Trade Policy (FTP) on the anvil, Mr Pillai said a lot of attention would be on whittling down archaic rules to bring about procedural simplification.

For instance, he said, “If you import through one port, you have to export through that port only. Otherwise you have to get clearance from the port of import for effecting export. When electronic data interchange (EDI) is already there in 32 ports, whether one imports through Kandla and exports through JNPT, why do you want the exporters to go all the way to get a no objection certificate from the port of import?”

He said that just in the case of self-certification provided to the special economic zones (SEZ), exporters with past performance and enjoying the status-holder position could be allowed the self-certification so that the basic trust is built with the exporting community.

Export paradox

Asked about the paradox of exports maintaining high momentum despite the adverse effect of an appreciating rupee on exporters’ margins, Mr Pillai said that some sectors such as petroleum product exports had shown a very high growth and this has reflected in high import growth rate too. He said that unless traditional exports with labour-intensive operations do well, export industry would continue to wrestle with problems.

However, he said, by next year EDI would be fully in place and the advent of a general goods and services tax (GST) by 2010 would help exporters in a big way along with the gradual improvement in physical infrastructure.

Denotification status

To a specific query about the status of denotification sought by the Goa Government on the three notified SEZs in that State, Mr Pillai said the Law Ministry has already opined about compensation to the developers and “we will now initiate the dialogue with the State Government as to whether it is prepared to face this or unnecessarily add to litigation?”

He said the next meeting of Board of Approval for SEZs is scheduled for March 20.

Mr Pillai is hopeful of exports fetching $155 billion this fiscal against the target of $160 billion.

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