Booster shot for export sector coming
The government is planning a raft of measures, including the extension of an existing interest-subsidy regime to help exporters stay competitive in a world market that has shown nascent signs of recovery in recent months.business Updated: Jan 31, 2010 22:24 IST
The government is planning a raft of measures, including the extension of an existing interest-subsidy regime to help exporters stay competitive in a world market that has shown nascent signs of recovery in recent months.
An official, who did not wish to be identified, said the government is considering extending the interest rate subsidy of two percentage points offered in bank credit to leather manufacturers, marine products, textiles and handicrafts.
In July government had decided to extend the existing 2 per cent interest subsidy on bank credit to certain employment intensive export sectors till March 31, 2010.
Under the scheme banks charge exporters an interest rate of 7 per cent and the government pays the banks directly to ensure the lending institutions do not bear the cost of a lower interest rate.
The official also said the finance ministry is also likely to allow exporters to raise cheaper overseas credit or external commercial borrowing (ECB). A new set of ECB norms for exporters are likely to be announced in budget for 20010-11 that would be presented later this month.
The country’s exports grew 18.2 per cent in November, after contracting for 13 months in a row, triggering hopes that the worst may be over for traders.
Shrinking world demand had severely affected India’s handicrafts, gems and jewellery, leather and textile exports.
“With the arrest of decline in exports, the short-term objective is to nurse the worst hit sectors to good health. Providing cheaper credit is under active consideration of the government,” said the official.
The official also said that the service tax exemption net for exporters could be widened further to help traders reduce transaction costs.
At present exporters exempted from paying tax on about 10 services such those rendered by ports, road transport, railways and warehouses.