Government may restore interest subsidy for exporters

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After taking a decision to end the tax-refund DEPB scheme from October 1, 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 per cent, whereas for large corporates it may be 2 per cent 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 Ministryin this regard. 

The interest subvention scheme, which lapsed on March 31, had offered two per cent 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 a 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 PassBook (DEPB) the stimulus which was given in the form of sops to the extent of 2-3 per cent has also been withdrawn.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 per cent in the second half of the current fiscal," FIEO President Ramu Deora said. 

During April-August this fiscal, exports increased by 54.2 per cent to USD 134.5 billion. 

On rupee depreciation, which fell 41 paise today to an over two-year low of Rs 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 four to five per cent, thus, making our imports expensive," he said. 

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

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