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“We are looking at easing certain procedural impediments after the (current Parliament) session gets over… There will be an interim policy sometime around February 27,” a senior commerce ministry official, who did not wish to be identified, told Financial Chronicle.
Some measures are also likely to be announced in the Cabinet meeting next week, he official.
The export sector, which has warned of 10 million job losses, has been asking for cheaper credit and refund of essential taxes to be able to compete in the global market.
It argues that at a time when demand in the international market is falling quickly and sharply, the only way out is to make Indian goods cheaper than those offered by competitors like China, Indonesia and Thailand.
According to commerce secretary G K Pillai, “certain procedural issues faced by exporters are likely to be addressed by the end of the month. However, the (stimulus) packages (announced earlier) are comprehensive enough to address their problems. One has to wait and watch till the two packages gets operationalised.”
In the interim budget, pre- and post-shipment export credit for labour- intensive exports, such as textiles (including handloom and handicrafts), carpets, leather, gem & jewellery, marine products and for small and medium enterprises was provided with an interest subvention of two per cent till September 30 of this year.
The first stimulus package had allowed this subvention till March 31. The interim budget extended this to stabilise exports in the backdrop of the global economic slump.
Textile products, leather goods, handicrafts, gems & jewellery exports are among the worst hit in the global slump.
“The situation is extremely challenging and we have got to do much more than what other countries are doing to promote their exports,” said George Jacob, managing director of the Chennai-based Indconnexion International, which exports leather garments, bags and handicrafts.
Since the global recession began to worsen in September, Indian exporters have been demanding increase in drawback and DEPB rates by 3 to 5 per cent on all products. Duty drawback enables exporters to obtain a refund of customs duty and central excise duty. In DEPB the basic and special customs and central excise duties paid on the imported content of export products are refunded.
Exporters have also complaints about service tax refunds. “We want service tax to be refunded from the date this was notified in the foreign trade policy. Until these issues are addressed seriously, insignificant changes here and there are not going to work,” said Subhash Mittal of Payal International, who also head the Silk Export Promotion Council.
He said that to induce buyers in the US, Japan, Europe to buy our products we must offer them goods at cheaper rates.
The textile sector alone is expected to see the loss of about a million jobs, both in direct and indirect employment.
Ajay Sahai, director general of the Federation of Indian Export Organisations (Fieo), said the the need of the hour was to protect jobs. “Even to look at newer markets one needs sufficient backing. I am sure the government is going to take some more action to help the sector, as it is an issue of protecting jobs. We have to be competitive globally to survive.”
Exporters have also asked for income-tax exemption on export profits based on the net foreign exchange norm for traditional sectors.
India’s exports grew at an annual average rate of 26.4 per cent in dollar terms in the past four years. Foreign trade increased from 23.7 per cent of GDP in 2003-04 to 35.5 per cent in 2007-08. In the first nine months of the current year, export growth came down to 17.1 per cent, the finance minister said in his budget speech.
Official figures for January are to be released on March 2, but initial data indicate a decline by 22 per cent.
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