The Hindu : Business : Relief package for exporters

Online edition of India's National Newspaper
Friday, Nov 30, 2007
ePaper

Business

Business

Relief package for exporters

Special Correspondent

More services exempt from tax

Sops to leather, handicrafts, marine
products and textiles
Terms of pre and post-shipment
credit eased

NEW DELHI: The Union Government on Thursday granted reliefs by way of tax exemptions on more services and further easing of terms in pre and post-shipment credit for certain select sectors along with sharp cuts in the import duty on a number of man-made fibres and their intermediates. The relevant notifications giving effect to these measures have already been issued.

Announcing the support measures in a statement in Parliament, Finance Minister P. Chidambaram noted that the additional relief to exporters was deemed necessary as the rupee had appreciated by 9.7 per cent against the dollar between April 3 and November 20 this year, the rise on a year-on-year basis between October 2006 and October 2007 had been as much as 15.1 per cent.

The Finance Minister pointed out that while the appreciation of the rupee reflected the strength of India’s economy in many ways, the sharp rise over the last several months had nevertheless “put pressure on the export sectors, particularly those with low import intensity such as leather, textiles, handicrafts and marine products.”

While the two relief packages announced in July and October, totalling Rs. 1,400 crore, were aimed at ameliorating the hardships of 13 specific export sectors, the current package is particularly for four sectors — leather, handicrafts, marine products and textiles — in view of their large value added features.

Accordingly, an additional subvention of two per cent (in addition to the two per cent already offered earlier) in pre-shipment and post-shipment credit has been granted to leather and leather manufactures, marine products, handicrafts and all categories of textiles under the existing scheme including RMG and carpets but excluding man-made fibres from November 1 to March 31, 2008.

The total subvention, Mr. Chidambaram said, would be subject to the condition that the interest rate, after subvention, would not fall below seven per cent, which is the rate applicable to the farm sector under priority lending.

This apart, 180 days for pre-shipment and 90 days for post-shipment, excepting the carpet sector for which the term would be 270 days for pre-shipment and 90 days (like other sectors) for post-shipment was announced. Also service tax is to be exempted for exporters under three new services, namely, storage and warehousing services, specialised cleaning services (Fumigation and disinfection) and business exhibition services.

Alongside, Mr. Chidambaram announced that the allocation for reimbursement of TED (terminal excise duty) and CST (Central sales tax) had also been raised from Rs. 300 crore and Rs. 600 crore in the second supplementary. As for the textile exporters, Mr. Chidambaram announced a cut in the customs duty on PSF and PFY from the current 7.5 per cent to five per cent, and on other man-made fibres from 10 per cent to five per cent.

The customs duty on intermediates for PSF and PFY such as polyester chips DMT, PTA and MEG had also been reduced from 7.5 per cent to five per cent and on paraxylene (a raw material for PTA) from two per cent to nil.

However, there is no change in the customs duty for nylon chips, nylon yarn, caprolactum, rayon grade wood pulp and acrylonitrile.

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section