A worried government on Monday announced new sops, including extension of an existing subsidised bank loan scheme and widened the list of tax free services for embattled exporters struggling to stay afloat amid shrinking world demand.
Finance minister Pranab Mukherjee announced that the subsidised 7 per cent interest bank loan scheme to leather manufacturers, marine products, textiles and handicrafts would be extended by six more months.
“I propose to extend the interest subvention beyond the current deadline of September 30, 2009 to March 31, 2010,” Mukherjee said.
Exports from the country has contracted for the eighth successive month, plunging by 29.1 per cent in May.
“Around 5 lakh persons have lost jobs in the export sector in the last one year and immediate steps, including cheaper loans, were required to be taken,” said President of Federation of Indian Export Organisations (FIEO) A. Shaktivel.
Under the subsidised interest rate scheme, specified exporters can now avail bank loans at 6 per cent. The government pays the banks directly to ensure that lending institutions do not have to bear the additional burden of providing cheaper credit.
The government also widened the service tax exemption net for exporters to help traders reduce transaction cost, for which they can claim refund of taxes, to stay competitive in the world market.
Besides, a specific insurance scheme for Export Credit and Guarantee Corporation (ECGC) for badly hit export sectors has been extended to March 2010.