BUSINESS

Jaitley to take up exchange rate issue with FM

NEW DELHI NOV. 10. The Union Commerce and Industry Minister, Arun Jaitley, today assured exporters that the exchange rate problem will be taken up with the Finance Minister, Jaswant Singh, to ensure sustained export growth. He empathised with their fears over the present global trade scenario in which the U.S. dollar was depreciating while China's currency remains fixed to the dollar at a single rate for the past decade. In contrast, the rupee has been appreciating against the dollar for some time now.

Mr. Jaitley told the chairpersons of the Export Promotion Councils at a meeting organised by the Federation of Indian Export Organisations (FIEO) that these issues would be taken up suitably with the Finance Minister to ensure that export growth is sustained without exporters having to curtail profit margins any further. He said discussions would also cover export-related issues pertaining to the Finance Ministry.

During the meeting, representatives of the councils and FIEO stressed the need to provide assistance to small-scale units affected by rupee appreciation. They suggested that the facility of giving licence on incremental turnover should be made available within the same year and should also be extended to all eligible exporters on incremental growth during 2002-03 without applying the 25 per cent growth criterion. This would help reduce input costs especially for small units.

In addition, they sought restoration of Section 80 HHC to provide for 100 per cent exemption on export profits. They also proposed the launch of a freight subsidy scheme in which half the freight is reimbursed if the value of 2 per cent of the free-on-board (FOB) value of exports. This would to some extent offset the transaction cost, it has argued.

Regarding credit issues, they proposed that the Reserve Bank of India open a `dollar window' to lend to Indian banks at LIBOR (London inter-bank offered rate). They also felt that the RBI could give directives to banks to first meet the needs of foreign currency funds for exporters and only then extend FCNR-B (foreign currency non resident) loans to corporates, which are not exporting. This suggestion has been made, according to FIEO, because non-availability of dollars to exporters is attributed to the fact that corporates who may not be exporters are also sourcing FCNR funds because of the low interest rate structure and banks find it safer to lend to them.

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