Exporters’ interest subsidy may be extended on Re woes
EXPORTERS need not lose heart. While the interest rate subvention provided to exporters last year on pre-shipment and post-shipment credit lapsed earlier this week, the government seems keen to extend it with retrospective effect. Government sources said that the finance ministry has started work on the relevant notification and it would be made official soon. Subvention in interest rate for exporters was first announced for nine sectors and the small and medium-sized exporters in July last year as a measure to mitigate the effects of an appreciating rupee. Since the rupee is continuing to play havoc with exporters’ costing and pricing exercises, the commerce department had moved a Cabinet note suggesting that the interest subsidy should be extended for some more time. “The finance ministry is open to extending the benefit by another six months. The relevant notification may be put out soon,” an official said. The nine sectors which were allowed a 2% subvention in the interest rates include textiles (including handlooms), readymade garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods and toys. The list was expanded to 13 sectors in November 2007, with the inclusion of jute and carpets, cashew, coffee and tea, solvent extraction and deoiled cake, and plastics and linolen. To give a further boost to leather, handicrafts, marine products and textile, the sectors witnessing a negative growth in exports, the government provided an additional subvention of 2% on interest rate over and above the 2% already provided. The interest rate subvention for the four sectors were subjected to the prerequisites that the interest rate should not fall below 7%, which is the priority lending rate for agriculture, following the subvention. The average export credit interest rate ranges between 9% and 9.5%.