Import duty cut to aid exporters
Policy makers are busy scripting new strategies to counter the impact of rupee surge and hardening interest rates on exporters. 7 ways to avoid the growth traps
By Piyush Pandey & Gaurav Pai, TNN |
MUMBAI: Policy makers are busy scripting new strategies to counter the impact of rupee appreciation and hardening interest rates on exporters. This time it may include import duty cut in certain categories and abolition in many others. The commerce ministry has submitted a new set of relief measures for consideration, some of which may figure in the coming Budget.
"Rupee appreciation and interest rate hardening has had a major impact on exporters, especially the textiles and software sectors," minister of state for industries Ashwani Kumar told ET. "The commerce ministry in consultation with the finance ministry is formulating a policy to combat their effect. This will include abolition of import duty on various categories and duty cut in related sectors," he added.
Other measurers being considered include reviving subsidy on exports by formulating a new policy of varying the subsidy according to change in rupee's value against dollar on the day of credit in banks.
The rupee has risen more than 12% over the last one year on large foreign fund inflows into the stock market, squeezing the margins of exporters and forcing some to slash output and jobs. It has strongly impacted the information technology (IT) and IT-enabled services (ITeS) sectors.
The commerce ministry estimates that over two-third of India's IT and ITeS exports are US bound and are in dollar terms. The ministry is suggesting that IT companies should diversify and broadbase their exports to European Union (EU) and East Asian countries.
The ministry's recommendations will be considered by the Cabinet Committee on Economic Affairs (CCEA) before these are formalised. The ministry has also voiced concern over states not reimbursing exporters' taxes in time. The finance ministry has raised tax refund rates since July and even cut bank lending rates for exporters to ease the pressure.
"Rupee appreciation and interest rate hardening has had a major impact on exporters, especially the textiles and software sectors," minister of state for industries Ashwani Kumar told ET. "The commerce ministry in consultation with the finance ministry is formulating a policy to combat their effect. This will include abolition of import duty on various categories and duty cut in related sectors," he added.
Other measurers being considered include reviving subsidy on exports by formulating a new policy of varying the subsidy according to change in rupee's value against dollar on the day of credit in banks.
The rupee has risen more than 12% over the last one year on large foreign fund inflows into the stock market, squeezing the margins of exporters and forcing some to slash output and jobs. It has strongly impacted the information technology (IT) and IT-enabled services (ITeS) sectors.
The commerce ministry estimates that over two-third of India's IT and ITeS exports are US bound and are in dollar terms. The ministry is suggesting that IT companies should diversify and broadbase their exports to European Union (EU) and East Asian countries.
The ministry's recommendations will be considered by the Cabinet Committee on Economic Affairs (CCEA) before these are formalised. The ministry has also voiced concern over states not reimbursing exporters' taxes in time. The finance ministry has raised tax refund rates since July and even cut bank lending rates for exporters to ease the pressure.
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