Tuesday October 23, 03:43 AM
Exporters may get sector-specific package now
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By Economy Bureau
The commerce ministry wants to expand the coverage of tax and levies refunded to exporters to help them overcome the losses arising out of the sharp rise in rupee's value. It is also planning to give a sector-specific package to the affected exporters. "We are looking at measures for refunding and remitting taxes to ensure that exporters get a level-playing field," commerce and industry minister Kamal Nath said on Monday after a meeting to assess the export performance of the plantation sector. A Cabinet note to bring in these changes would be circulated soon, he said. The measures are likely to include service tax exemptions on commission to foreign agents, overseas travel, payments to customs house agents and courier charges. There could also be a further 2% reduction in interest (from 8.5% to 6.5%) on export (pre/post-shipment) credit, which is linked to the PLR of banks. Though the interest rate was earlier reduced, exporters pointed out that the benefit was nullified due to an increase in PLR. Currently, the interest rate stands at 8.5-9%, which is 4.5-5% below the 13-13.5% PLR. Earlier, Federation of Indian Export Organisations (FIEO) president G K Gupta had demanded reduction in PLR by 100-125 basis points to lessen the interest burden. He had also suggested a reduction in transaction cost through exemption option rather than the refund route for service tax and VAT, which adds to transaction time and cost as well as avoidable paper work. The sector-specific sops would be for high employment-low import content sectors like handicrafts, textiles and leather. Nath said he was optimistic that the country would achieve the export target of $160 billion for 2007-08 despite more than 11% appreciation in rupee value against the dollar since January this year. This has resulted in Indian exports being less competitive, especially China, whose currency has depreciated along with the dollar. Nath, however, said, "The export target would be met just as targets were met in the previous years." The minister added that he would hold an overall export review meeting in November with the export promotion councils. However, senior commerce ministry officials had recently said $140 billion would be a more realistic target. Though the revenue department had informed the commerce ministry that it was not in favour of refunding the state level taxes to the exporters, the commerce ministry officials said the Cabinet would take a final call in the matter.
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