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From the President’s Desk…..
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My Dear Fellow Exporters,
We are deeply dismayed over the half-hearted and tardy implementation of the package announced by our Hon’ble Commerce & Industry Minister Mr. Kamal Nath in June 2007 to offset the losses to exporting community in the wake of strengthening of Indian Rupee.
The upward revision in drawback rates notified last month in July is highly inadequate to compensate the exporters against appreciation of our currency, and yet, the procedure for claiming supplementary rate is cumbersome and cost bearing. Our Federation had categorically written to the Finance Ministry requesting to facilitate automatic clearance of supplementary drawback amount. But despite tall claims made by the Government to speed up procedural formalities, we are made to bear archaic ways of working. We understand that when the drawback records are already available with the customs, we just need slight modification in the software programme to facilitate automatic clearance of supplementary claims of drawback.
The DEPB rates have been increased by only 2 to 3 percent as against 5 percent announced earlier, and even that has not been made operational for some unknown reasons. Exempting exports from all kinds of service taxes continue to remain confined in oratorical domains and the government policy of zero rating of exports exempting them from all indirect taxes appears merely rhetoric. Meanwhile, more and more services used by exporters keep getting trapped under tax net, year after year.
The two percentage decrease in pre and post shipment credit rate announced by the RBI has brought the export credit in the range of 7.5-8%, but the same is still above 6% proposed by the Commerce & Industry Ministry. Moreover, for the exporters with good track records, it has brought marginal benefit of 0.5% to 1% as they were already getting export credit at 3.5 or 4% below the BPLR. But most surprisingly, the banks have not devised the procedure to refund the excess interest charged between April to June despite clear instructions from the Central Bank. A great degree of confusion prevails in the banking industry over this issue as several banks are asking exporters to first pay the full interest and then claim refund three months later. On the other hand, some banks like the Exim Bank are yet to imbibe the spirit of the issue and claim that the directive to provide concessional credit covers only scheduled commercial banks.
In this scenario, it would be foolhardy to expect other announcements made by our Commerce Minister, such as making EEFC accounts interest bearing, to see the light of the day in near future. We agree with our Minister that 18% export growth recorded in July 2007 shows the resilience of Indian exporters, but I am sure that they would not be able to sustain any impressive growth for long against heavy odds. And I am doubly sure that this would have graver repercussions on employment scenario in our country. The least we expect at this juncture is the fullest and earliest implementation of the ‘relief package’ announced by our Commerce Minister against rising rupee.
Yours sincerely,
Ganesh Kumar Gupta
PRESIDENT
