|
From the President’s Desk…..
|
My Dear Fellow Exporters,
First of all, I take the opportunity to thank our Hon’ble Commerce Minister Mr. Kamal Nath for once again displaying his firm resolve to safeguard the interest of our farmers with respect to issues of market access and subsidies at the recent G4 meeting in Potsdam. Agriculture is the lifeline for our vast rural population and our Federation strongly believes that the interest of 60 percent of our population living on agriculture can’t be sacrificed at multilateral trade negotiations.
It was heartening that our Hon’ble Commerce Minister announced a relief package for exporters against the rising rupee at a meeting with our Federation joined by other export promotion agencies. His package includes enhancing entitlement under DEPB scheme and duty drawback rates by 5 per cent, reducing the rate of interest on both pre-shipment and post-shipment credit for exporters to 6 per cent, making the EEFC accounts once again interest-bearing, mandating scheduled commercial banks to earmark 15 percent of their total disbursal for export credit, reducing ECGC premium by 10 percent, reimbursing all arrears of terminal excise duty and central sales tax by 30th June 2007, and, ensuring immediate exemption or refund of service tax to exporters as promised under the Union Budget.
Sweltering under the impact of appreciating rupee for long, exporters are now having some sigh of relief and the package has restored their faith in the government’s commitment to treat export as a priority sector. But is the quantum of relief announced by the Hon’ble Minister sufficient to compensate for the losses suffered by the exporters and to arrest the slowdown witnessed by a few export sectors recently on account of appreciating rupee?
For those exporting under the DEPB and drawback routes, the announcements once put in force are expected to bring down the cost of merchandise by 7 to 8 percent and this would roughly neutralize the impact of the stronger rupee. But for the exporters using Advance Authorisation and DFIA schemes as well as the units in EHTP & STP and the EOUs, the compensation may not be more than two to three percent. In all cases, not more than 60 percent of the exporters are expected to be the beneficiaries of the relief package and then the quantum of relief may not be sufficient either.
Certain supplementary measures are thus needed, such as, refund of all un-rebated taxes and duties levied by both central and state governments. A new scheme to neutralise the high cost of electricity should also be put in place as our power tariffs are substantially higher than international average. Above all, an Export Marketing Fund with a corpus of about 0.5 percent of exports should be created - a demand the Federation has been making relentlessly for quite some time. If these supplementary measures are taken along with the announcements made by the Hon’ble Commerce Minister, then I can assure that we will successfully hit the FY07 export target of $160 billion. But the biggest question mark is when the Finance Ministry will approve the measures announced by our Hon’ble Commerce Minister.
As there are no signs of the rupee appreciation coming to a halt in near future, the exporters on their part should start learning to hedge their exposures. Our Hon’ble Commerce Minister has also rightly said, "It (rupee rise) is also an opportunity for all of you to move towards greater efficiency, reducing costs and enhancing competitiveness."
Yours
sincerely,
Ganesh Kumar Gupta
PRESIDENT
