INDIA BUSINESS WORLD - FEBRAURY 16^th - FEBRAURY 291^th - 2008

ECONOMIC SURVEY: MEASURES FOR RELIEF FOR EXPORTERS AFFECTED BY RUPEE APPRECIATION

While the rupee appreciated against other major currencies for most parts of the year, it was modest as compared to the rise against the US dollar. The Economic Survey 2007-08 says the appreciation of the rupee vis-a-vis the dollar, the main invoicing currency of export compared to the lower appreciation of competing countries coupled with the slow growth in imports of major trading partners like the United States, affected exports of some sectors with low import intensity.

To mitigate the effect and facilitate adjustment, the government announced several relief measures. These included Enhancement by 3 per cent of the Duty Entitlement Pass Book (DEPB) rates for nine sectors i.e. textiles (including handloom), ready made garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods and toys; and by 2 per cent for others.

Reduction in Export Credit Guarantee Corporation (ECGC) premium by 10 per cent.

Release of around Rs 600 crore to clear all arrears of terminal excise duties and Central Sales Tax (CST) reimbursement.

Enhancement of the rates of duty drawback by around 10 per cent to 40 per cent. Interest subvention of 2 per cent for pre-shipment and post-shipment credit for the nine sectors and all exporters from the SME sector which was further extended from December 31, 2007 to March 31, 2008.

Refund of Service Tax to exporters for use of services not in the nature of Input Services.

Provision to pay interest on Exchange Earners Foreign Currency (EEFC) balances for outstanding balances.

Widening the list of interest subvention of 2 per cent for pre-shipment and post-shipment credit to include jute, textiles and carpets; processed cashew, coffee and tea; solvent extracted de-oiled cake; and plastics and linoleum.

Raising the revenue ceiling for Vishesh Krishi and Gram Udhyog Yojana by Rs 300 crore.

Reduction in Custom Duty on some items relating to textiles sector.