Worried over the impact of dipping currency, rising interest rates and change in economic conditions, the Centre has decided to come out with an incentive package for exporters in order to help them to deal with the emerging situation and be competitive at the international level.
Exporters are reeling under the impact of high interest rates, something that is making them uncompetitive in the international market.
Commerce Secretary Rahul Khullar said the incentive package could be announced in two-three weeks. “Times have changed, budget conditions have changed. In another week Duty Entitlement Pass Book (DEPB) will end. We need to rejig that package also. Secondly, interest rates have radically changed between last year and now,” Mr. Khullar said.
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The Commerce Secretary said the exchange rates have also severely impacted the foreign currency-denominated credit. “Now what we have to do is to put together a package which would look at how do you address interest rate hike, how do you address access to foreign currency denominated credit and issues relating to packaging credit and then of course the question of incentives and reshuffle,” he added.
The Ministry had already cautioned exporters that despite exports registering a handsome growth of over 54 per cent to $134 billion in the April-August period, there could be a downslide in view of the worrying economic conditions in the U.S. and the sovereign debt problem in Europe. The package, which was given post-2008 financial crisis by way of subsidised interest rates, was withdrawn in March this year.
Officials in the Commerce Ministry said the government was likely to restore the interest subsidy for exporters to maintain the country's competitiveness in the global market. Small exporters may get subsidy between 3.5 per cent and 3.75 per cent, whereas for large corporates it may be 2 per cent subvention, the official added. The Commerce Ministry is currently engaged in discussions with the Finance Ministry to work out the finer details of the incentive package.
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Meanwhile, Federation of Indian Export Organisations (FIEO) President Ramu S. Deora said that by and large new Duty Drawback rates were on expected lines except few aberrations. Welcoming the Duty Drawback Rates for 2011-12, he said the new rates were on the parameters announced by the Finance and Revenue Secretary on September 16.
“Since these rates cover all the products of DEPB Scheme also, exporters would be able to factor the revised rates effective October 1 while quoting for new orders,” he said. He said that the federation was having an exclusive meeting with Revenue Secretary and CBEC on October 28 in New Delhi and on October 29 in Mumbai to have inputs of members on newly announce rates as Ministry of Finance was keen to address the concern of the exporters on the new Duty Drawback Rates, particularly for items which have moved from DEPB to Duty Drawback.