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More subsidies for exporters

The government unveils a fresh package of interest subsidy and reimbursement of some costs to help struggling exporters, reports Gaurav Choudhury.

business Updated: Nov 29, 2007 23:10 IST
Gaurav Choudhury

The government unveiled on Friday a fresh package of interest subsidy and reimbursement of some costs to help exporters struggling after a 15 per cent rise in the rupee against the US dollar over the past year.

Customs duty on polyester and other man-made fibres and their intermediate products have been reduced to 5 per cent in the third such package since July.

Finance Minister P Chidambaram told Parliament that the post-subsidy interest cannot exceed 7 per cent, the rate for priority lending.

The government offered an additional interest rate subsidy of two per cent ( in addition to the two per cent offered earlier) in credit to leather manufacturers, marine products, all categories of textiles (excluding man-made fibre) and handicrafts. These are among worst-hit sectors, threatening the jobs of lakhs.

Chidambaram said storage and warehousing services, specialised cleaning services and business exhibition services will be exempt from service tax for exporters to help cut costs.

Besides, allocation for reimbursement of terminal excise duty (TED) and central excise duty has been raised from Rs 300 crore and Rs 600 crore.

Export leaders say that 80 lakh people could lose their jobs if the adverse trend is not checked.