India announces Rs14b package to compensate exporters
Saturday, 14 July 2007
NEW DELHI, July 13 (PTI): To compensate exporters hit hard by over 10 percent Rupee appreciation, the Government yesterday announced Rs.14-billion package, including increased rates of tax refunds.
"The enhanced rates of tax refunds through Duty Drawback Scheme on nearly all products have been made effective from April 1 and will cost Rs.8 billion to the Centre exchequer," Finance Secretary D. Subbarao told reporters here.
Impact of tax paid on services used as inputs in the manufacturing or processing of exports has been factored in duty drawback rates, he said.
Another package for all small scale enterprises and other nine sectors would have revenue implication of Rs.6 billion, the finance secretary said.
This package relate to concessional pre-shipment and post- shipment credit by banks for SMEs, textiles, ready-made garments, leather products, handicrafts, engineering products, processed farm products, marine products, sports goods and toys.
Now, banks would charge interest rate not exceeding Benchmark Prime Lending Rate minus 4.5 percent on pre-shipment credit up to 180 days and post-shipment credit up to 90 days on the outstanding amount till December, Financial Sector Secretary Vinod Rai said.
At present, banks charge interest rates not exceeding BPLR minus 2.5 percent on these two kinds of credit, he said adding the government would provide two percent subvention to banks through the Reserve Bank of India.
To a query, Subbaroa said the package would enable the country to meet exports target of USD 160 billion for the current fiscal.
The Finance Ministry officials also announced relaxation from monthly and quarterly ceilings of expenditure for deemed export benefits to enable the Commerce Ministry to meet the pending reimbursement claims.
It is estimated that these claims are in the order of Rs.6 billion, officials said, adding that the claims will be examined and fully reimbursed as expeditiously as possible.
Subbarao said there is no one-to-one relationship between the Rupee appreciation and decline in exports, which depend on many other factors. He said the package had become necessary due to "unanticipated" appreciation of rupee in recent months, adding government has not fixed any target for rupee value.
"The enhanced rates of duty drawback would cover almost all products," Revenue Secretary P.V. Bhide said.
"The package would arrest the decline in exports witnessed during the first two months this fiscal," Chairman of Apparel Export Promotion Council Vijay Aggarwal said.
Reacting to the relief package, Assocham President Venugopal Dhoot said the package would provide a relief to give a new fillip to exporters for realising their export targets.
In the readymade garment sector, the new drawback rate for knitted shirts would now be 10 percent with a cap of Rs.48 per piece against the existing rate of seven percent with a cap of Rs.31 per piece.
The new drawback rate for grey cotton yarn of less than 60 counts is 5.4 percent with a cap of Rs.11 per kg against the existing four percent with a cap of Rs.eight per kg. The drawback rate on toys was also raised to six percent from 2.1 percent, the officials said.
"The enhanced rates of tax refunds through Duty Drawback Scheme on nearly all products have been made effective from April 1 and will cost Rs.8 billion to the Centre exchequer," Finance Secretary D. Subbarao told reporters here.
Impact of tax paid on services used as inputs in the manufacturing or processing of exports has been factored in duty drawback rates, he said.
Another package for all small scale enterprises and other nine sectors would have revenue implication of Rs.6 billion, the finance secretary said.
This package relate to concessional pre-shipment and post- shipment credit by banks for SMEs, textiles, ready-made garments, leather products, handicrafts, engineering products, processed farm products, marine products, sports goods and toys.
Now, banks would charge interest rate not exceeding Benchmark Prime Lending Rate minus 4.5 percent on pre-shipment credit up to 180 days and post-shipment credit up to 90 days on the outstanding amount till December, Financial Sector Secretary Vinod Rai said.
At present, banks charge interest rates not exceeding BPLR minus 2.5 percent on these two kinds of credit, he said adding the government would provide two percent subvention to banks through the Reserve Bank of India.
To a query, Subbaroa said the package would enable the country to meet exports target of USD 160 billion for the current fiscal.
The Finance Ministry officials also announced relaxation from monthly and quarterly ceilings of expenditure for deemed export benefits to enable the Commerce Ministry to meet the pending reimbursement claims.
It is estimated that these claims are in the order of Rs.6 billion, officials said, adding that the claims will be examined and fully reimbursed as expeditiously as possible.
Subbarao said there is no one-to-one relationship between the Rupee appreciation and decline in exports, which depend on many other factors. He said the package had become necessary due to "unanticipated" appreciation of rupee in recent months, adding government has not fixed any target for rupee value.
"The enhanced rates of duty drawback would cover almost all products," Revenue Secretary P.V. Bhide said.
"The package would arrest the decline in exports witnessed during the first two months this fiscal," Chairman of Apparel Export Promotion Council Vijay Aggarwal said.
Reacting to the relief package, Assocham President Venugopal Dhoot said the package would provide a relief to give a new fillip to exporters for realising their export targets.
In the readymade garment sector, the new drawback rate for knitted shirts would now be 10 percent with a cap of Rs.48 per piece against the existing rate of seven percent with a cap of Rs.31 per piece.
The new drawback rate for grey cotton yarn of less than 60 counts is 5.4 percent with a cap of Rs.11 per kg against the existing four percent with a cap of Rs.eight per kg. The drawback rate on toys was also raised to six percent from 2.1 percent, the officials said.