Govt may restore interest subsidy for exporters

Govt may restore interest subsidy for exporters

New Delhi: After taking a decision to end the tax-refund DEPB scheme from 1 October, the government is likely to restore interest subsidy for exporters to maintain the country’s competitiveness in the global market.

“The small exporters may get subsidy between 3.5-3.75%, whereas for large corporates it may be 2% subvention," a source said. The decision in this regard may be announced soon, he said.

He said discussions have already been held between top exporters’ organisations and the finance ministry in this regard.

The interest subvention scheme, which lapsed on 31 March, had offered 2% discount on the interest rate charged by banks.

Exporters have been putting pressure on the government that they should be given access to finance at subsidised interest rates since they are to compete with China, where borrowing cost is quite less.

Besides, under the alternative scheme to the Duty Entitlement Pass Book (DEPB) the stimulus which was given in the form of sops to the extent of 2-3% has also been withdrawn.

Exporters’ body Federation of Indian Export Organisations (FIEO) said the robust growth in exports witnessed between April-August period may not be sustained in the third and fourth quarter of the current fiscal.

“Exports growth may not maintain the tempo due to rising credit and input cost. Exports may grow merely 10-12% in the second half of the current fiscal," FIEO president Ramu Deora said.

During April-August this fiscal, exports increased by 54.2% to $134.5 billion.

On rupee depreciation, which fell 41 paise on Thursday to an over two-year low of 48.74 against the US dollar, Deora said that it is not much of a gain to the exporters.

“Every exporter is also a importer. Weak rupee has increased the raw material cost by 4-5%, thus, making our imports expensive," he said.

FIEO said exporters are also under pressure to maintain their competitiveness overseas and double their exports to $450 billion by 2013-14.