September sunset predicted for rupee sops
The incentives announced last year to help exporters deal with losses due to sharp rise of the rupee may be withdrawn soon.
By ET Bureau |
NEW DELHI: The incentives announced last year to help exporters deal with losses due to sharp rise of the rupee may be withdrawn soon. With the dollar inching up, the government feels there is no need to continue the sops, which included a subvention in interest rates. Orders for withdrawal of the sops are expected to be issued by the government shortly and the sops are likely to go by September-end.
Speaking to the media on Monday at an event organised by the Delhi Exporters Association (DEA), commerce secretary G K Pillai said the orders are expected to be issued in July and the sops would be withdrawn two months later so that the exporters get some time to adjust their pricing accordingly. ���Exporters need to be given some time to adjust,��� he said.
Finance ministry had given an incentive package of about Rs 8,000 crore in different phases last year to make up for the losses incurred by exporters due to more than 12% appreciation in domestic currency against dollar last year. The Indian currency has, however, fallen over 8% in 2008, as crude oil surged and foreign investors sold Indian equities.
The sops included enhancement of DEPB rates by 3% for nine identified sensitive sectors (such as textiles, handicrafts, marine and leather) and 2% for others; and reduction of rate of interest on pre and post-shipment credit by 2% for all and an additional 2% for the severely affected sectors.
However, the exemption of service tax on 16 services announced last year would stay. ���The service tax exemption was given under the principle that no taxes are to be exported. These would stay,��� Mr Pillai said.
Earlier, speaking at the inaugural ceremony of the new facility of drawback disbursement through credit in a single account of an exporter from anywhere in the country, Mr Pillai said over the last few years a silent revolution was taking place in the implementation of EDI by revenue department.
Speaking to the media on Monday at an event organised by the Delhi Exporters Association (DEA), commerce secretary G K Pillai said the orders are expected to be issued in July and the sops would be withdrawn two months later so that the exporters get some time to adjust their pricing accordingly. ���Exporters need to be given some time to adjust,��� he said.
Finance ministry had given an incentive package of about Rs 8,000 crore in different phases last year to make up for the losses incurred by exporters due to more than 12% appreciation in domestic currency against dollar last year. The Indian currency has, however, fallen over 8% in 2008, as crude oil surged and foreign investors sold Indian equities.
The sops included enhancement of DEPB rates by 3% for nine identified sensitive sectors (such as textiles, handicrafts, marine and leather) and 2% for others; and reduction of rate of interest on pre and post-shipment credit by 2% for all and an additional 2% for the severely affected sectors.
However, the exemption of service tax on 16 services announced last year would stay. ���The service tax exemption was given under the principle that no taxes are to be exported. These would stay,��� Mr Pillai said.
Earlier, speaking at the inaugural ceremony of the new facility of drawback disbursement through credit in a single account of an exporter from anywhere in the country, Mr Pillai said over the last few years a silent revolution was taking place in the implementation of EDI by revenue department.
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DEA president S P Agarwal said a single bank account would go a long way in cutting transaction costs and saving time. From July 1, exporters will not have to maintain separate accounts at the various ports and airports from where their shipments are exported for getting drawback payment. Instead, they can choose one bank, get their account authenticated and get all their payments in one account.Download
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