Writing instrument sector seeks sops to take on China

Written by Yogima Seth | New Delhi | Updated: Aug 27 2009, 04:58am hrs
Ahead of the foreign trade policy, the Rs 3,000-crore writing instrument industry, which include players like Luxor, Cello, Linc, Flair, Kores, Rotomec, is seeking the status of labour-intensive sector and consequently asking for some sops from the government to be at par with China in international markets.

According to the Writing Instruments Manufacturers Organisation (WIMO), there is a need to increase the DEPB rates by 3-5% from the present level of 5% for writing instruments and 4% for parts of writing instruments as this will offset all direct and indirect taxes that the industry has to pay as of today.

Also an additional interest rate subvention of 2%, given by banks to other sectors like textiles, handicrafts, carpets, leather, gems and jewellery, is needed to make the industry players competitive in other markets.

In an effort to encourage exports of new products to traditionally non-export markets in Latin America and Africa, the Centre currently allow exporters incentives worth 2.5% of the value of exports in the form of duty free scrips that can be used by exporters to import goods duty free.

The industry is highly labour intensive and more than 50% of workforce are women employees. Moreover, with exports worth Rs 450 crore from India vis--vis export of nearly $1 billion from China, the government should provide incentives to exporters in a time bound manner to tide over the present crises, says DK Jain, vice president, WIMO. According to Jain, grant of draw-back at various ports should be expedited, simple procedure for services tax refund should be framed and central excise rebate should be given in 30 days time. Further, the import of moulds and machines should be made duty free as against 3% duty as of now, he says.

There is a need to change market development assistance scheme under which certain companies get subsidy to participate in international trade fairs and exhibitions. Currently, companies that are rated as export and star-export houses (with export turnover of more than Rs 15 crore) are not entitled to this subsidy and hence the cost involved in tapping new markets is very high, says Deepak Jalan, managing director, Linc Pen and Plastics.

According to Jalan, either the limit for Rs 15 crore should be removed or increased to Rs 100 crore and this facility should be granted for direct participation by exporters in trade fairs instead of forcing them to participate through export promotion councils.

Longer tenure for post-shipment credit, which is currently available only up to 180 days, should be provided at least for 365 days, keeping in view the financial crunch faced by overseas buyers who are demanding longer credit period, added Jain who is also the president and chairman of Luxor Writing Instruments.