Kamal Nath announces package to exporters, assures of all help to reach Export target of US$ 160 billion

Shri Kamal Nath, Minister of Commerce & Industry, today announced a package of wide ranging measures to counter the negative impact of rupee appreciation on India’s exports. Following extensive interaction with a high-level delegation of the Federation of Indian Export Organisations (FIEO) and all Export Promotion Councils (EPCs) led by the FIEO President, Shri G.K. Gupta, the Minister announced the following measures:

Ministry of Commerce would recommend to the Ministry of Finance the following:

Duty Entitlement Pass Book (DEPB) and Duty Drawback rates may be enhanced by 5%.

Rate of interest on pre-shipment and post-shipment credit be reduced for exporters to 6%. (At present, the rate of interest charged is in the range of 9 to 11%).

Exchange Earners’ Foreign Currency (EEFC) Accounts may be made interest bearing. (As on date, EEFC Account deposited is stated as current account and interest on it discontinued since 2000).

Scheduled Commercial Banks may be mandated to meet 15% export credit disbursement target.

Notify the Service Tax Exemption / Refunds for exports announced in the Foreign Trade Policy 2007 without further delay.

All arrears of TED (Terminal Excise Duty) & CST (Central Sales Tax) reimbursement would be cleared by 30th June, 2007 and the Ministry of Finance will be requested to provide additional funds, if necessary.

Export Credit & Guarantee Corporation (ECGC) will reduce its premia rates by upto 10% to make exports more competitive.

A Committee is also being set up to assess job losses due to rupee appreciation and loss of export orders, Shri Kamal Nath said.

While agreeing with exporters that rupee appreciation was currently a major problem, Shri Kamal Nath exhorted the exporting community to look at it also as an opportunity to enhance their competitiveness and to look at new markets. "Rupee rise is no doubt a problem, but it is also an opportunity for all of you to move towards greater efficiency, reducing costs and enhancing competitiveness. Whether rupee rises or not, new competition in global markets is a fact of life which has to be addressed. You must also look at new markets. I am confident that the resilience of our exporters will enable us to tide over the problems caused by rupee appreciation and achieve the export target of US $ 160 billion set for the year 2007-08", he said.

In his presentation to the Minister, President/FIEO said that the exporting community had been badly hit due to the sharp appreciation of the Indian rupee over a short period of time. "We have reached a stage where we have stopped entering into new contracts. This will be reflected in sharp dip in exports from July onwards. Many of small exporters of traditional items in price sensitive segments have already closed their factories", he said. Due to the impact of the appreciating rupee, secondary data on different sectors reveals that export realizations have fallen by 12% for chemicals, 6.0 to 6.5% for textiles and exports are likely to dip by 20 - 25% for processed food and agro-products, electronics & electrical items and steel products. Hardening of interest rates have further impinged export growth in a inherently high transaction cost economy like India, he added.

"The loss of exports will have serious implications for employment opportunities and we are likely to lose 40 lakh jobs this year. The wages will also be squeezed with drop in export value on account of Rupee appreciation and increase in inputs cost due to inflation and firming up of international metal prices", FIEO President said.

Source : Press Information Bureau

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