Exports sop: EEPC to pursue Pranab

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The Engineering Export Promotion Council (EEPC), the apex body of engineering goods exporters, is planning to persuade Union external affairs minister Pranab Mukherjee to make the government change its decision of withdrawing the interest on Export Earning Foreign Currency Account (EEFCA) and interest subvention scheme.

This plea comes after the Federation of Indian Exporters Organisation (FIEO) failed to convince the Union finance minister that withdrawing the schemes will make it critical in meeting the export targets.

The government wants India's share in global exports to go up to 1% by the end of the current fiscal, which is a little over 0.83% at present.

EEPC chairman Rakesh Shah said, "Pranab Mukherjee heads almost all the group of ministers and if he wishes, he can make the government change its decision."

Mukherjee will be attending EEPC's All India Award Presentation programme the chief guest on August 9.

Shah said EEPC will make its deliberation with the Union external affairs on that day.

Early this month, the finance ministry withdrew the 3.5% interest on EEFCA and the interest subsidy on export credit on the grounds that rupee has already depreciated by 7% as against US$ since January and exporters have started getting their profits.

The incentives were first announced in March 2007 to counter the appreciation of rupee against the dollar, and in March 2008, the schemes were further extended up to March 2009 with an additional budgetary allocation of Rs 500 crore over the Rs 300 crore the finance ministry alloted in 2007.

The appreciation of rupee led to reduction in profits of the exporters.

However, the Reserve Bank of India (RBI), on August 1, had notified the closure of the interest rate subvention scheme and interest on EEFCA with effect from October 1.

Shah said the government allowed the exporters to open an export earning foreign currency account with deposits of up to $1 million and offered them an interest rate of 3.5%, which was below the libor rate. Now the government has not withdrawn the provision of opening an EEFCA but has withdrawn the interest rate, which means it will earn from the exporters but will not give them any return.

The interest subvention gave a subsidy of 4.5% on pre-shipment and post –shipment credits, which has been brought down to 2.5% at present.