The finance ministry has indicated that that it is unlikely to continue with the sops given to exporters to tide over the losses suffered during rupee appreciation, citing the depreciation of the local currency and the resultant gains made by exporters.
The finance ministry is keen to avoid giving extension of 4% interest subsidy to exporters beyond September 30. The ministry also is mulling reduction of drawback and DEPB rates from 8-9% to around 5.5-6%, sources said.
Upset over this move, exporters said have written to the Members of the Consultative Committee of Commerce and Finance ministries, comprising Members of Parliament cutting across party lines.
Exporters have stressed the need to continue with the sops saying just around 9% rupee depreciation since the beginning of this fiscal is not enough to help them recover fully from massive losses incurred by them due to the 13% rupee appreciation during the last financial year.
Representatives of Federation of Indian Export Organisations (FIEO), the apex body for exporters, will also soon meet with commerce and industry minister Kamal Nath and textiles Minister Shankar Singh Vaghela with the plea that the government should continue all export sops till this fiscal end.
?While exports have gone up substantially in 2007-2008, last three months figure for sectors such as textiles and apparels, handloom, handicrafts leather, marine products etc., show slow down of export of traditional sector,” FIEO president G K Gupta said.
He said exporters will mobilise support against the government’s proposed move to reduce drawback and DEPB rates and deny extension of interest subsidy scheme. ?Though the rupee has depreciated to a little over Rs 43 against the US dollar, several exporters are still delivering their goods at around Rs 40 or Rs 40.20 as was committed six months ago. We are still going through a bad patch,” Gupta said.
He also expressed concern over the decline in share of manufactured items in country’s exports from 67% to 64% at a time when share of manufactured items is gradually increasing in global merchandise trade. Gupta cautioned that employment will be impacted in exports sector if the sops are withdrawn.
Representatives of Apparel Export Promotion Council and Confederation of Indian Textile Industry met Finance Minister on Tuesday requesting to extend the export sops and the Centre to refund the state-level levies paid by the exporters. However, the Finance Minister declined to give his nod to the proposal, sources said. The textile industry also said increase in costs of cotton and plant machinery was also making it difficult for them to compete with competition from Vietnam and Bangladesh.
