Exporters seek full exemption from Rs 2,000-crore derivatives losses

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New Delhi: in other currencies like yen. But the deals backfired when the value of Indian currency plummeted 20% in 2008. As a result, many small and medium exporters suffered losses.

Following this, export firms complained to the commerce ministry that the derivative losses would wipe out their turnover and took the banks to court seeking reprieve. However, some banks have already made out-of-court settlement with the exporters. Late last year, Sundaram Multi Pap—first to move the court—withdrew the case against ICICI Bank, which was the most aggressive derivatives player.

FIEO also suggested increase in DEPB rates by 3%, removal of minimum 7% ceiling on export credit and providing 2% additional subvention, moratorium on term loans, income tax exemption on export profits, creation of export development fund to provide better marketing facilities to MSMEs and reimbursement of difference in international price and domestic minimum supply price of cotton.

FIEO demand list

• Settlement of derivative losses on no-profit, no-loss basis by banks

• Increase drawback and DEPB rate by 3%

• Removal of minimum 7% ceiling on export credit

• 2% additional interest rate subvention

• Reimbursement of difference between international and domestic cotton price

• Moratorium on term loans

• Income tax exemption on export profits

• Creation of fund to facilitate better marketing exposure to MSMEs

• Longer tenure of post-shipment credit