Exporters complain of high cost of credit, warn of job losses

Govt says it'll soon announce incentives and restore subsidy scheme

As merchandise exports continued to fall for the ninth consecutive month in September, the government on Wednesday assured exporters that it will soon announce incentives, including restoration of interest subsidy scheme to boost the outbound shipments.

The government's assurance came when exporters met commerce secretary Rita Teotia and other department officials to discuss the issues hampering exports such as high cost of credit and transaction, and imposition of minimum alternate tax (MAT) on special economic zones (SEZs). The exporters said these would result in job losses.

Teaotia told exporters the allocation for export incentive schemes in the current financial year has been increased from Rs 18,000 crore to Rs 21,000 crore.

ASSURANCE

• As merchandise exports continued to fall for the ninth month, govt assured exporters it will soon announce incentives
• The government’s assurance came when exporters met commerce secretary Rita Teotia

"She advised exporters to ensure timely submission of bills to get this credit," a Commerce Ministry statement said.

Teaotia told them their suggestions will be crystallised in a concrete form and specific actions would be taken by her department, it added.

Exporters said the government should immediately take steps to control the decline, otherwise it would be difficult to achieve the last year's figure of $310.5 billion.

Federation of Indian Export Organisations (FIEO) vice-president Ramesh Kumar Agarwal said, "We have got assurance that the interest subvention scheme and more benefits under Merchandise Exports from India Scheme (MEIS) will soon be announced by the government."

The Cabinet is expected to take a decision soon on extending the three per cent interest subsidy scheme for exporters as the commerce department and finance ministry have resolved their earlier differences. Under the scheme, which ended on March 31 this year, exporters get loans at affordable rates.

FIEO submitted a list of 36 items where India has the potential to export. These segments, if tapped properly, could add $65 billion in the next three years. These include bovine cuts, frozen and boneless, textured yarn of polyesters, dresses of synthetic fibres, articles of jewellery and motorcycles.

Council for Leather Exports chairman Rafeeq Ahmed said if the declining trend continues, exports might fall by $50 billion this year.

He said about 20,000 people have already lost their jobs in the leather sector. About 2.4 million people are employed in the segment.

Further, Engineering Export Promotion Council chairman Anupam Shah said safeguard duty imposition on certain steel products are impacting exports of engineering goods.

"This year's engineering export will not record healthy growth unless government takes steps," said Shah.

Airing similar views, Export Promotion Council for EOUs and SEZs vice-chairman Rahul Gupta said SEZs were earlier contributing significantly to the country's total exports, but imposition of MAT severely impacted shipments.

"We have urged the government to reduce MAT to 7.5 per cent (from the current 18.5 per cent) and announce more steps to revive investors' interest in these zones," said Gupta.

On the suggestions for changes in the MEIS, Teotia said the foreign trade policy was drawn after extensive deliberations and it might not be possible to make changes frequently.