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From the President’s Desk…..
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My Dear Fellow Exporters,
I am writing this piece when my entire colleagues are shocked at the untimely demise of our two young officials. God loves those who die young, but we are cursed with the void they create for us. I pray the Almighty to give us the strength to bear the loss and resurrect the Federation to keep serving the exporting fraternity.
The 35 percent export growth recorded for the month of October does make an impressive reading, especially when our exports are badly hit by the rising rupee. But what lies underneath this statistics is a different story. The growth owes much to the extraordinary performance by gem and jewellery, petroleum and engineering sectors rather than any meaningful increase in the general volume of exports. The first two sectors are relatively insulated from rupee appreciation whereas the growth in engineering sector is primarily due to increase in prices of steel by 15 to 20 percent during April-October 2007. On the other hand, exports from sectors like textiles, handicrafts or marine products continue to witness unabated decline. And that’s the biggest cause of concern as these sectors are employment intensive.
The Government has tried to provide some relief to the exporters but so far its impact has been very very marginal. The subvention of interest rate for export credit has been pegged only at 7%. Only a few services have been tax exempted leaving aside many other important services used during the course of exports. My SME Members are not getting dollar denominated pre and post shipments foreign currency loan (PCFC) which is cheaper than the rupee credit even after subvention. Small increase in drawback rates for textiles sector is of hardly any meaningful assistance. The increase for most variety of textile garments is in the range of 0.25 to 1% and for fabrics in the range of 0.25 to 0.5% whereas the industry needs not less than 4 to 5% increase to offset the loss against rupee rise. The fate of DEPB scheme is still hanging in balance. The scheme has now been linked with the scheme for refund of state taxes and duties, but unfortunately, despite avowed official principle of ‘zero rating’ of exports, the issue of refund of states taxes and duties is tossing between central and state governments. I don’t know how my colleagues can do their costing in such uncertainty.
The forecast and the trend are pointing to further appreciation of Indian Rupee in the near future. We are heading towards a tougher time but I am sure this will make us more competitive. I urge my colleagues to convert the rupee threat into an opportunity by exploring new markets.
Finally, I wish the New Year brings good fortunes for the Federation as well as our exporter friends.
Yours
sincerely,
Ganesh Kumar Gupta
PRESIDENT
