THE government on Thursday reduced Customs duty on polyester staple fibre and polyester filament yarn from 7.5% to 5% and on other manmade fibres from 10% to 5%. It also gave tax exemption on three more services besides enhancing interest subsidy to give relief to exporters in identified sectors hit by the rupee’s appreciation. Sectors benefitting from the package include leather, handicrafts, marine products and textiles.
“Leather, handicrafts, marine products and textile sectors are particularly hard hit by the appreciation of the rupee in view of its low import intensity and large value added features. Exporters and industry associations met the Prime Minister (on the issue). I also had extensive meetings with them together with banks. Based on these meetings, we are now offering further support to exporters,” finance minister P Chidambaram said.
The rupee has appreciated 15.1% against the dollar since October 2006 ––spelling doom for exporters, especially those in the labour intensive sectors.
The minister asserted that the government was sensitive to the pressures on these sectors and was conscious of the need to offer support to prevent job losses and to give time to these sectors to make a smooth adjustment to the changing economic scenario.
Customs duty on intermediates for PSF and PFY –– polyester chips, DMT, PTA(purified terepthalic acid) & MEG (mono ethylene glycol) would also be reduced from 7.5% to 5% and on paraxylene (a raw material for PTA) from 2% to nil, he said adding that there would be no change in customs duty for nylon chips, nylon yarn, caprolactum, rayon grade wood pulp and acrylonitrile. The government has exempted storage and warehousing services, specialised cleaning services (fumigation and disinfection) and business exhibition from service tax, the minister said.
The government will provide an additional interest subsidy of 2% (2% was already being offered earlier) to exporters of leather, handicrafts, marine products and all categories of textiles excluding manmade fibre for pre-shipment and post-shipment credit. For the carpet sector the term would be 270 days for preshipment instead of 180 days for other sectors and 90 days (like other sectors) for post-shipment