The Hindu Business Line : Commerce Ministry unhappy with export relief package

New Delhi, Nov. 30 The third tranche of relief measures provided to exporters suffering under appreciation of the rupee would not help overcome the serious erosion of competitiveness incurred by exporters and also the job losses the export industry is faced with following the drastic decline in overseas orders.

Talking to Business Line here, official sources said that the Department of Commerce has raised a lot of issues for immediate resolution to provide a breather to exporters but the three packages announced in July, October and on Thursday together have not even touched the fringe of the concerns of the exporting community.

Stating that the Commerce Ministry has been receiving disconcerting reports from various export promotion councils about order book depletion and consequent retrenchment of workers, the sources said that in the handloom sector alone the job loss would be 20,000 by the end of this fiscal and in the organised mill sector 24,000 workers would be laid off.

Lay offs

They said in the knitwear industry 7,000 workers had been laid off and in Jammu and Kashmir, 35,000 people in the carpet, shawl, chain-stitching and paper mache industry would be out of work.

In the labour-intensive leather and tannery segment in West Bengal 25,000 workers had lost their jobs and in Chennai, three factories had laid off 890 workers so far, the sources said, adding that in marine products the export orders lost amount to a staggering Rs 709 crore with shrimp export order alone accounting for Rs 400 crore.

seafood stocks

A matter of deep concern is that seafood stocks worth Rs 1,000 crore remain unsold.

In the marine product export industry, 40 out of 280 units across the country had put down shutters and the remaining units have been operating at less than 40 per cent of capacity.

As many as 20,000 workers were retrenched in the processing units alone, the sources noted.

Out of 1.8 lakh hectares under aquaculture in Andhra Pradesh, 10,000 hectares had been abandoned, the information available with Marine Product Export Development Authority shows.

Tax relief

The sources said that an important demand of the export industry pertains to exemption/refund of services tax being borne by it and so far only eleven services had been given this relief.

While the Commerce Ministry sought that at least 16 essential services must be rid of services tax for exporters, the relief announced so far covers some services which the Ministry has not pitched for even as it omits important services such as commission to foreign agents, inland haulage charges, courier services, banking charges, travel expenses and advertisement expenditures of exporters.

They further lamented that the department has been pressing for an increase of one per cent in DEPB (Duty Entitlement Passbook Scheme) to give some sort of cushion for harried exporters but this has not been done.

DEPB question

On the two per cent subvention on pre and post-shipment credit over and above the one announced earlier, the sources said that the plea of the department was to give export credit at 6 per cent rate of interest.

The fact that the Thursday package specifically indicated that interest rate to exporters should not be less than 7 per cent provided to agriculture under priority sector lending shows that the concerns of small and medium enterprises (SMEs) have not at all been addressed.