With exports dipping by nearly 10% to $11.5 billion on account of the global economic slowdown, the government on Friday announced another round of measures to help exporters, who are faced with the twin dilemma of slackening demand and lowering prices.
As part of the second stimulus package, the government has restored the benefits under the Duty Entitlement Pass Book (DEPB) scheme till December 31, 2009. ?This will provide predictability and stability of regime in the short term for future contracts,? an official release said. The government has also restored the DEPB rates prevailing before November last year.
The DEPB scheme aims to neutralise the incidence of customs duty on an imported input for an export through reimbursements. But as the reimbursement is given on the basis of pre-determined rates, it is not compatible with WTO norms and was set to be replaced.
Additionally, the duty drawback benefits on a number of items including knitted fabrics, bicycles, agricultural hand tools and specified categories of yarn have been increased. The rates have been increased retrospectively from September last year.
Meanwhile, the government has also decided to set up a committee headed by finance secretary Arun Ramanthan to simplify procedural issues that would reduce delays being faced by the exporting community. The committee, which would also include as members secretaries of the departments of revenue and commerce, will try to address all issues on an urgent basis.
Exporters however have demanded more measures including a 3% increase in drawback and DEPB rates, along with a five year income tax holiday and two year moratorium for term loans. ?Unless the government considers the above package favourably, there will be huge job losses across the country and the export target of $ 200 billion dollar will not be reached, ?A Sakthivel, president Federation of Indian Export Organisations said.
To help out exporters, the government in the first fiscal stimulus package announced on December 7, permitted EXIM Bank to obtain from RBI a line of credit of Rs.5,000 crore. This will be used to provide pre-shipment and post-shipment credit, in rupees or dollars, to Indian exporters at competitive rates.
The government also provided an interest subvention of 2% upto March-end on pre and post-shipment export credit for labour intensive exports such as textiles, leather, gems & jewellery, marine products and SME sector, subject to minimum interest rate of 7%. It also promised to provide additional funds of Rs 1100 crore to ensure full refund of terminal excise duty/CST.
Further, an allocation for export incentive schemes of Rs.350 crore was to be made. The government also assured to provide back-up guarantee to ECGC to the extent of Rs.350 crore to enable it to provide guarantees for exports to difficult markets/products.
Wave of delight
• Restoration of DEPB rates prevailing prior to November 2008
• Duty drawback benefits enhanced. Will take effect from September 1, 2008
• Committee set up under the chairmanship of the finance secretary to discuss exporters issues
• Exim Bank to provide pre and post-shipment credit, in rupees or dollars