New Delhi: The Centre on Thursday approved a fresh Rs 500 crore assistance to help exporters make up for the loss in orders due to strenghtening of the rupee.
While the government had earlier announced a 2% interest subsidy for exporters of some labour-intensive goods like textiles, leather, marine products, handicrafts, and carpets the Rs 300 crore allocated for the purpose was found inadequate following a comprehensive study undertaken by the Reserve Bank of India.
RBI also said that some of the demand for subsidy will come during the next financial year too and the government should provide for that too, sources involved with the exercise said.
With the latest announcement, government’s bailout package has crossed the Rs 5,700 crore mark. Earlier this week, the government exempted three more services from payment of 12.36% tax in a move that surprised many since it came barely 10 days before the budget.
“The measures will ensure mitigation of the effect of rupee appreciation across the export sectors, make them internationally competitive and will also enable them achieve export targets,” an official spokesperson told reporters after the CCEA meeting.
Under the scheme, exporters are given two per cent relief in pre-shipment and post-shipment credit in specified sectors. The interest rate can, however, can not go below 7%, the floor set for farm loans. Sugar is the only sector where mills have successfully lobbied with the government — in what they termed was in the interest of farmers — to grant them loans at zero interest, thanks to the high subvension levels.
The scheme, the spokesperson said, “will provide relief to exporters and mitigate (their) hardships on account of unanticipated and steep rupee appreciation.” The export of traditional items especially handicraft, textile and carpets have suffered on account of 15% appreciation in the value of rupee against the dollar in the last 16 months.