New Delhi: The goverment on Thursday announced a fresh set of measures to help exporters beat the currency blues. The package includes additional 2% interest subsidy, tax refunds and reduction in import duty on inputs used by the textiles sector, which has been hit the most due to a 15% appreciation of the rupee agaisnt the dollar between October 2006 and 2007.
Finance minister P Chidambaram told the Lok Sabha that customs duty on polyester staple fibre (PSF) and polyester filament yarn (PFY) was being cut from current from 7.5% to 5%, and on other man-made fibres from 10% to 5%. Besides, intermediaries for PSF and PFY like polyester chips would require a payment of 5% import duty instead of 7.5% at present. Paraxylene, a raw material, can be imported duty free now.
The sops come less than a week after junior finance minister SS Palanimanickam had ruled out further incentives to help ailing exporters. Between Palanimanickam’s statement in Parliament last Friday and Chidambaram’s announcement on Thursday, textiles exporters had petitioned Prime Minister Manmohan Singh. Following the industry delegation’s meeting with Singh on Monday, the finance ministry sprung into action and worked out a package over the next three days.
The rupee appreciation appeared a happy dilemma for thefinance minister as he said that he would bear the criticism “stoically” as he had when the Indian currency depreciated. He said it had “up and down sides” to it while it being a sign of the strength of the economy.
Accepting that exporters faced problems owing to the rupee appreciation, Chidambaram announced fresh concessions to help them cut “job loss” and “adjust to the new situation”. “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,” Chidambaram said.