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Indian exporters seek support to offset rupee appreciation
Thursday, 23 October 2003, 19:30 IST
NEW DELHI: Indian exporters' lobbies have sought the intervention of the government to help them remain globally competitive amidst appreciation of the rupee over the last 18 months.
Responding to concerns voiced by the Federation of Indian Export Organisations (FIEO), export promotion councils and commodity boards, Commerce Secretary Dipak Chatterjee Wednesday said measures would be take to ensure export growth.
Exporters fear that unless the government steps in it will be hard to not only achieve the 12 percent growth targeted for the fiscal but also stem the drop in export realisation over the last few months.
In 2002-03 India had recorded over 19 percent growth to cross a record $52 billion mark.
After a brainstorming session earlier in the day, the different groups, with the help of experts from the academic and banking sector, formulated steps for making Indian exports competitive in the face of the six percent appreciation of the rupee against the dollar in the last one and a half years.
The suggestions submitted to the commerce secretary include urging the Reserve Bank of India (RBI) to open a dollar account to lend dollars to Indian banks at LIBOR to enable them to finance Indian exporters at LIBOR plus 0.75 basis as per the central bank rules.
The exporters also said banks should give them preference over corporates in the matter of foreign currency loans.
Additionally, exporters' lobbies sought the introduction of freight subsidies with 50 percent of the freight cost being reimbursed if the freight value was two percent of the freight on board (FOB) value of exports.
"This would to some extent offset the transaction cost," the FIEO stated.
It also sought the roll back of tax on export profit and reverting to a practice before 2000 when 100 percent exemption on export profit was allowed. Recently, under a presidential ordinance, the government had given such a tax exemption on export profits from wood-based handicrafts.
As against the government policy announced in March of allowing the incremental turnover to be made available to exporters in the following year, exporters have asked that this provision be made available in the same year.
"This would help save the input cost to some extent which would in turn offset the adverse impact on the competitiveness of exports due to the appreciation of the rupee," said FIEO.
Source: IANS
Source: IANS