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Recession-hit exporters get incentives

NEW DELHI: Seeking to address the problems being faced by the exporting community due to continued global slowdown and recession especially in the U.S. and European Union markets, Union Finance Minister Pranab Mukherjee came out with a ‘package of sops’ for exporters including extension of tax holiday for one more year for export oriented units (EOUs), software technology parks (STPs) and electronic hardware technology parks (EHTPs) and extension of the interest subvention scheme till March 2010.

Announcing a slew of measures, the Government announced extension of the time period for two per cent interest subsidy and insurance cover up to March 2010, besides raising the market development assistance allocation. The interest subvention on pre-shipment credit for seven sectors, including handlooms, handicrafts, carpets, leather, gems and jewellery, marine products as also the small and medium exporters will now be available till March 31, 2010.

“Our exporters by virtue of their close links to the external sector have borne the brunt of the global economic crisis. It is therefore, appropriate that we continue to provide all possible assistance to our exporters to help them overcome the short term disadvantages,” the Finance Minister said. The scheme was to end in September this year. The allocation for Market Development Assistance scheme has been enhanced for the current fiscal by 148 per cent over 2008-09 to Rs. 124 crore. The adjustment assistance scheme of the Export Credit Guarantee Corporation (ECGC), which covers 95 per cent of the badly hit sectors, was extended till March 2010. The government had earlier announced Rs. 350 crore scheme for the Export Credit Guarantee Corporation (ECGC), which expires on June 30.

ECGC provides a range of credit risk insurance covers to exporters against loss in export of goods and services. It also guarantees to banks and financial institutions to enable exporters to obtain better facilities from them. ``I propose to extend the interest subvention beyond the current deadline of September 2009 to March 31, 2010.” Mr. Mukherjee said. Mr. Mukherjee said to support the micro, small and medium enterprises sector, which was affected by the slowdown in exports, the government would facilitate the flow of credit at reasonable rates, by providing a special fund out of Rural Infrastructure Development Fund to the Small Industries Development Bank. “This fund of Rs. 40,000 crore will incentivise banks and state finance corporations to lend micro and small enterprises (MSEs) by refinancing 50 per cent of incremental lending to MSEs during the current financial year,” he said.

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