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Re-hit exporters may get extra sops as govt worries on missing target

CMA Gul S , Last updated: 13 September 2007  
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The government is likely to dole out an additional relief package for exporters hit by an appreciating rupee by the month-end with fears that the country may not achieve the $160-billion export target.

The move comes at a time when the exporters have been complaining that the Rs 1, 400-crore relief package announced by the government in July was inadequate to meet the losses incurred by them due to the rising rupee.

“We are thinking of a new package for exporters. The rupee appreciation has impacted exports and the government is seized of the matter as this is resulting in employment losses too,” commerce and industry minister Kamal Nath said on Tuesday.

Nath also said Prime Minister Manmohan Singh had been apprised of the matter and the government was considering suggestions to tackle it. Officials said the commerce ministry had set up a team to study the impact of the strengthening rupee at the grass-root level.

The rupee has strengthened from Rs 45 to a dollar in October-November 2006 to little above Rs 40.375 on Tuesday. This has affected growth in exports, which has fallen from 23% in April to 14% in June.

The Rs 1,400-crore package was intended mainly at employment-intensive sectors such as leather, textiles and small companies.

The government package included interest rate relief, adjustment of duty drawback rates and reimbursement of export claims.

The government had also given relaxation from monthly and quarterly ceilings of expenditure for deemed export benefits to enable the commerce ministry to meet the pending reimbursement claims.

It had, however, left out products like automobiles, machinery, paper, cotton, spices, coffee, cereals, cashew, sesame, iron ore and minerals. Exporters and various industry bodies have been demanding inclusion of more products under the relief package, enhancing of drawback/ DEPB rates from 3% to 5%, reducing interest on export credit to below 5%, increasing value caps, allowing conversion of shipping bills, announcing a package for export oriented units against free shipping bills, and income tax incentive for exporters.

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CMA Gul S
(Program Manager)
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