Nath for service tax waiver for exporters
Worried over the decline in growth of exports in rupee terms, Kamal Nath has sought Manmohan Singh's intervention for speedy notification of service tax waiver for exporters.
By PTI |
NEW DELHI: Worried over the decline in growth of exports in rupee terms, Commerce Minister Kamal Nath has sought Prime Minister Manmohan Singh's intervention for speedy notification of service tax waiver for exporters.
"I have written to Prime Minister on this issue and it is expected that notification for this is likely to be issued shortly," Nath told the media.
However, he said delays could be because of an elaborate exercise that Finance Ministry needs for working out modalities of service tax refund.
Nath had announced the measure in the annual supplement to the Foreign Trade Policy in April and was to be implemented within a month. The move was aimed at benefitting exporters as the rupee has risen by 6-14 per cent against major currencies such as the US dollar, pound and euro since August last year.
During April-May 2007-08, exports grew 18 per cent in dollar terms, but merely six per cent in rupee terms.
"It is the growth of exports in rupee terms that reflect the value realisation of exporters. Hence, this is more relevant in present context. The growth of exports is expected to decelerate even further as there is a lagged effect of exchange rate appreciation on exports," he said.
Nath expressed confidence that the recent Rs 1,400 crore package would help exporters in neutralising the impact of the rupee rise on margins, but conceded export competitiveness has become a matter of concern for the government.
"RBI data shows notable increase in the real effective exchange rate weighted by six major currencies. This is an indicator of eroding competitive strength of Indian exports in recent months," he said.
According to a study ordered by Nath, competitiveness of chemicals has eroded by 12 per cent, textiles by six per cent and food products 25 per cent.
"I have written to Prime Minister on this issue and it is expected that notification for this is likely to be issued shortly," Nath told the media.
However, he said delays could be because of an elaborate exercise that Finance Ministry needs for working out modalities of service tax refund.
Nath had announced the measure in the annual supplement to the Foreign Trade Policy in April and was to be implemented within a month. The move was aimed at benefitting exporters as the rupee has risen by 6-14 per cent against major currencies such as the US dollar, pound and euro since August last year.
During April-May 2007-08, exports grew 18 per cent in dollar terms, but merely six per cent in rupee terms.
"It is the growth of exports in rupee terms that reflect the value realisation of exporters. Hence, this is more relevant in present context. The growth of exports is expected to decelerate even further as there is a lagged effect of exchange rate appreciation on exports," he said.
Nath expressed confidence that the recent Rs 1,400 crore package would help exporters in neutralising the impact of the rupee rise on margins, but conceded export competitiveness has become a matter of concern for the government.
"RBI data shows notable increase in the real effective exchange rate weighted by six major currencies. This is an indicator of eroding competitive strength of Indian exports in recent months," he said.
According to a study ordered by Nath, competitiveness of chemicals has eroded by 12 per cent, textiles by six per cent and food products 25 per cent.
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