labels: trade
Commerce ministry unveils relief package for exportersnews
13 June 2007

Mumbai: The commerce ministry has announced a five per cent hike in duty entitlement pass book (DEPB) and duty drawback rates to help exporters ride out the impact of a rising rupee.

Simultaneously, the interest rate on pre- and post-shipment credit would also be brought down to 6 per cent from the current 9-11 per cent range.

The Export Credit and Guarantee Corporation (ECGC) will also be made to cut its premium rate by up to 10 per cent.

Scheduled commercial banks will also be asked to meet the 15 per cent export credit disbursement target.

Announcing the two-part measures, commerce minister Kamal Nath said some measures will be taken up with the finance ministry for early implementation while others will be implemented by the commerce ministry.

The commerce ministry has also urged the finance ministry to notify the service tax exemptions and refunds announced in the annual supplement to the Foreign Trade Policy this year, he said.

Speaking on the sidelines of a meeting with a delegation of the Federation of Indian Export Organisations (FIEO) and the export promotion councils to discuss the impact of the sudden rise of the rupee on exports, Nath said the commerce ministry will clear all the arrears from reimbursements of terminal excise duty and central sales tax by the end of this month.

He said a committee would be set up with representatives from the ministries of commerce, finance, labour and textiles as well the directorate general of foreign trade and the Indian Institute of Foreign Trade to assess the job losses and the loss of exports caused by the appreciating rupee over twelve months. The committee will be asked to submit its report in a month.

The exporters, however, felt the government should intervene to check the upward spiral of the rupee against the dollar.

Besides the squeeze on their margins, exporters fear there will be widespread loss of jobs across sectors. "If the rupee appreciates further, unemployment will go beyond government control. Around 4 to 5 million people have lost their jobs in the past 3 months alone," G K Gupta, president, FIEO, said.

Gupta also said it is unlikely that exporters could meet the FY08 export target of $160 billion.

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Commerce ministry unveils relief package for exporters