The government?s package for exporters hit by the appreciating rupee, which included interest rate relief, adjustment of duty drawback rates and reimbursement of export claims, has failed to impress them.
Exporters feel the move to increase the existing drawback rates will result in an effective benefit of only 1.5%, while the rupee has gone up by over 10% in the last four months. According to G K Gupta, president, Federation of Indian Export Organisations, the drawback rates should have been raised by an additional 5% to address the losses, as suggested by commerce ministry. ?The 2% drop in the interest rate would not be of much help due to southward movement of prime lending rates in the last one year,? he said. He, however, added that the effectiveness of increased drawback rates from April 2007 will provide some cushion to exporters whose profitability has eroded continuously due to the appreciating rupee.
Federation of Indian Chambers of Commerce and Industry (Ficci) said a better fiscal regime could help the exporting community.
To give a further push, greater value addition and diversification of export basket was needed, Ficci said. Higher duty drawback could go a long way in offsetting the rupee rise, it added.
Ficci also stressed on providing added quality edge to Indian exports. ?We have to look for higher market-end and quality segments?, Ficci president Habil Khorakiwala said. ?We have to move up the value chain and make intensive efforts to retain and capture new markets?, he added. On the adverse impact of rupee appreciation on exports, Khorakiwala said, ?We need not be defeatist about it and accept lower export target.?
The Confederation of Indian Industry said the package would provide some relief to small and medium industry, but wanted additional relief measures.
Assocham president Venugopal N Dhoot called the relief package for exporters ?timely? and added that ?exporters need such a package to make their export proceeds competitive and to realise higher export potential?. He suggested that RBI should intervene to reduce the interest rate.
Mukhtarul Amin, chairman, Council for Leather Exports, said, ?The increase in duty drawback rates will benefit the exporters to even out their losses partially. They will also be able to charge competitive rates in the international markets where the country is losing extensively to others like China.?