Commerce Ministry, on Wednesday, recommended a package of measures including reduction in interest rate on export credit for the consideration of Finance Ministry to counter the negative impact of rupee appreciation on country’s exports.
   
The package was evolved after extensive interaction between Commerce Ministry and a high-level delegation of Federation of Indian Export Organisations (FIEO) and all Export Promotion Councils (EPCs).

Announcing the package, Commerce Minister Kamal Nath said his ministry would recommend to the Finance Ministry to enhance Duty Entitlement Pass Book (DEPB) and Duty Drawback rates by 5 per cent.

Commerce Ministry would also recommend reduction in rate of interest on pre-shipment and post-shipment credit to exporters to 6 per cent from the present rate of interest ranging between 9 and 11 per cent.

Other recommendations include making Exchange Earners’ Foreign Currency (EEFC) Accounts interest bearing.  Presently, EEFC Account deposited is stated as current account and interest on it discontinued since 2000.
It has recommended that scheduled commercial banks be mandated to meet 15 per cent export credit disbursement target. “We expect the Finance Ministry to notify the Service Tax Exemption and Refunds for exports announced in the Foreign Trade Policy 2007 without further delay,” a senior commerce ministry official said.
All arrears of TED (Terminal Excise Duty) and CST (Central Sales Tax) reimbursement would be cleared by June 30 this year and the Ministry of Finance will be requested to provide additional funds, if necessary. Export Credit and Guarantee Corporation (ECGC) will reduce its premia rates by upto 10 per cent to make exports more competitive, Mr Kamal Nath said.

Meet export target

India is confident of meeting its 2007/08 export target of $160 billion, despite the rise in the rupee, Mr Kamal Nath said. “We will meet the target. I am confident,” Mr Kamal Nath told reporters.

Mr Kamal Nath told reporters his ministry was setting up a panel of experts to examine the extent of job losses in the export sector, and said he would meet the finance ministry to seek tax rebates to enable exporters to tide over the appreciation.

“Since the loss is felt by small companies and traditional sectors of exports with very high export-employment ratio, we are likely to suffer job losses of 8 million in the current fiscal,” Federation of Indian Export Organisations President G K Gupta said.

India’s export target of $160 billion for fiscal 2007/08 year, which began in April, compares with exports of $125 billion in 2006/07. Exports were $10.6 billion in April, lower than $12.6 billion a month earlier. Exporters suggested the rupee could be pegged to a basket of currencies of competitor countries, including China, Thailand, Pakistan, Sri Lanka, Bangladesh, Vietnam and Indonesia.