More relief under way for rupee hit exporters

Exporters reeling under the dollar slide could be in line for a slew of reliefs in the Foreign Trade Policy coming up next month.

The steps being contemplated by the Commerce Ministry range from possible reimbursement of, or rebate on, some of the taxes incurred on export production; to zero duty EPCG (export promotion capital goods) scheme in place of the five per cent concessional duty, possibly for the first time.

These and a dozen other sops are being considered to mitigate exporters’ losses due to the rupee’s 11 per cent appreciation against the dollar, according to a note circulated by the Commerce Minister, Mr Kamal Nath, at a meeting organised by the Federation of Indian Exporters’ Organisation here on Friday.
Export growth


He said he still expected an export growth of 20 per cent this fiscal over 2006-07. The target is $160 billion. “The abatement of service tax on all services related to export production and delivery of exports” is being examined. The Government is also debating a scheme to reimburse or discount even State levies such as octroi, mandi tax, electricity duty that are currently not reimbursed.

Those exporting more than 75 per cent of their production may also get the EPCG benefit without any binding on average EO (export obligation).

Textiles and automobiles may also get the benefit of duty-free import of R&D equipment up to 25 per cent of f.o.b. value.

Mr Nath said, “The worldwide slowdown driven by the US (dollar slide) is a problem but there are other engines of growth” such as Europe, Africa and China. “We are looking at country-specific duties and we are going to have trade agreements.”

With Japan, for instance, there had been a breakthrough in the MFN (most favoured nation) negotiations. Europe and top African countries were the other preferred baskets that were being pursued.
SHORT OF TARGET


Total exports are likely to touch $ 150 billion by the end of March, falling a little short of the targeted $160 billion, according to Mr Sakthivel, Vice-President & FIEO Regional Chairman. He said exports from labour-intensive and employment-intensive sectors like textiles, readymade garments, handicrafts, leather products had declined.

Calling for a dual rate system for exporters, he said, “With the support of the Government, we are sure that exports will accelerate in the last quarter.” He urged the Minister to take up the issue of RTAs (regional trade pacts) that were eating into Indian export markets.

The FKCCI President, Mr S.S.Patil, said infrastructure such as electronic data interchange would cut export cost and bring the $ 200-billion export target for 2008-09 closer.