The Commerce Ministry is preparing a sector-specific relief-package for exporters who have been facing a severe erosion of competitiveness following the rupee's relentless rise.
Government officials said that the package would pertain specifically to labour-intensive sectors such as textiles, leather and handicrafts.
Finance Minister P.Chidambaram would meet heads of export promotion councils on November 15 to examine the impact of a stronger rupee. The package would subsequently be tabled before the Cabinet Committee of Economic Affairs (CCEA) for approval.
The government has already given three relief packages to exporters aggregating Rs 5,200 crore as the $160-billion export target for 2007-08 appears increasingly unattainable in the wake of an erosion of earnings, although the minister was optimistic about achieving the target. In July, the government had announced a Rs 1,400-crore package that included cheaper bank credit, increased rate of tax refunds and faster reimbursement claims. It also announced concessional pre-shipment and post-shipment credit by banks for small and medium exporters and those enterprises exporting textiles, ready made garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods and toys.
In September, the government exempted exporters from paying tax on services rendered by ports, road transport and railways. The move could come as a relief to the beleaguered exports sector that has seen a significant income squeeze as a fallout of the strengthening rupee. The government imposes 12 per cent service tax along with 3 per cent education cess on services.