The Hindu Business Line : ‘Focus now on micro-management of exporters’ specific issues’

Following two relief packages announced on December 7 last year and January 2 for industry including export segments reeling under slowdown, the Commerce Ministry is now focusing on micro-management of specific problems plaguing exporters instead of looking for any further larger packages.

Disclosing this to Business Line here in an interview, the Commerce Secretary, Mr Gopal K. Pillai, said that he does not envisage anything more coming than what has been announced in the recent two set of packages.

“But seeing the trend in some sectors like textiles, gem and jewellery, handicrafts, chemicals and so on, with labour-intensity, we may have to think of some further steps for them but that will be possible next month after we see the impact of the twin packages.”

He said following the December 7 package, the steep decline in exports noticeable in October and November last has been brought down reasonably as well as preliminary estimates indicate export growth was down by only 1.6 per cent.

Mr Pillai said even in the declining scenario, some segments such as tobacco, spices, oil meals, pharma, engineering goods, electronic goods and petroleum products have maintained positive growth for the first three-quarters of the current fiscal, while some others have shown persistently plummeting trends, warranting “something to be done to them”.

But “we can only hold them for sometime to keep them going and if there is no order there is nothing we can do because everybody is asking for everything”, Mr Pillai said, adding that one industry body even sought the Government to bear 50 per cent of the wages of its workers.

Referring to the demand of some 3 per cent hike in drawback rates by all exporters, he asked “by getting 3 per cent more in drawback rates would it help them get more order or it is only adding to their profit/bottom-line?”

He said companies might still have reserves from the past profitable years that could be drawn now to manage the affairs. Citing the case of whether the 10 to12 hours power shutdown in Chennai could be relieved if the government gives 3 per cent hike in drawback rates to exporters, Mr Pillai said that is why “we will have be to very selective and focus on labour-intensive exporting segments and micro-management is critical now”.

Asked about the first meeting of the Committee under the chairmanship of the Finance Secretary with himself and the Revenue Secretary as members to resolve hassles of exporters announced on the last package, Mr Pillai said the committee would meet next week.

He said, for instance, pending claims of service tax refund to exporters are Rs 50 crore, but only Rs 10 lakh of refund has been settled. The Committee will address this, he said, adding that the Government released Rs 800 crore by way of payout of arrears of terminal excise duty/central sales tax to exporters this week and this would serve their immediate working capital requirements.

He further said under focus market and focus products additional Rs 350 crore under market development assistance (MDA) is being released now with more number of products being brought in.

On the demand of the exporters that DEPB rates should be further hiked, Mr Pillai said the higher DEPB rates were given when $1 was Rs 39, and were subsequently withdrawn in October 2008 as the situation is now $1 is Rs 49. Still, he said, the Government has restored the original rates and the exporters are getting this benefit now.

To a query on the loss sustained by exporters in derivatives markets to hedge against currency fluctuations, Mr Pillai said that according to the Commerce Ministry’s report the loss would be somewhere between Rs 250 crore and Rs 260 crore, and it was suggested that compensation should be on a 50:50 basis under a ‘no-profit-no loss” basis to banks.

On prospects of achieving $200 billion target, he said till December 2008, export receipt was $130 billion. Since the last quarter is the peak period and assuming that it may not be the same intensity associated with last quarter this time round, Mr Pillai said that even on the lowest scale of $11 billion a month, “I will get $33 billion which would be $163 billion, more than last fiscal. But if it is $12-13-14 billion a month, we could achieve $170-175 billion easily.”

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