New Delhi, Oct 6 (UNI) The Government today announced further relief measures for exporters hit by a rising rupee currency and added more sectors eligible for lower bank lending rates.
A finance ministry statement said the government had extended the list for the exemption of service tax for general insurance services, technical testing and analysis agency and inspection and certification agency services for exporters.
Exporters will now be exempted from paying service tax for these services.
The rupee hit 39.36 per dollar on Thursday, its strongest since March 1998, and has gained one per cent this week.
''Government has been monitoring the situation arising out of the appreciation of rupee. The strengthening of the rupee is a reflection, in part, of the growing strength of the economy and has positive economic benefits by way of cheaper imports and subdued impact on prices,'' the statement said.
However, the rapid appreciation of rupee in recent weeks has adversely affected exporters who had contracted export orders earlier, it added.
Last month the Government had announced refund of service tax to exporters in respect of four services (Port Services, Transport of Goods, Transport by Railways, and other port service) for export purposes.
Earlier in July , the government had provided financial relief to the tune of Rs 1,400 crore in the form of accelerated reimbursement of dues to exporters, reduction in the interest rate on pre-shipment and post-shipment credit, and revision in drawback rates and DEPB rates.
The rupee has appreciated 11.6 per cent in the current year partly due to large capital inflows, both, in the stock market and through the foreign direct investment route.
This has affected profit margins of exporters, especially sectors which face competition from neighbouring countries like Pakistan, Sri Lanka and Bangladesh, where the currency appreciation has not been so sharp.
Jute and carpets, processed cashew, coffee and tea, solvent extracted de-oiled cake, plastics, linoleum and all exports from the SME sector have been added to the list of sectors eligible for lower lending rates from banks.
The government also announced payment of interest on the Exchange Earners Foreign Currency accounts for exporters and interest will be permissible on outstanding balances to the extent of one million dollars per exporter with the interest rates being determined by individual banks.
This would be valid up to October 31, 2008.
The period for which the reduction in the interest rate is has also been extended from December 31, 2007 to March 31, 2008.
The government has raised the revenue ceiling under Vishesh Krishi and Gram Udyog Yojana (VKGUY) from Rs 200 crore to Rs 500 crore. VKGUY, is a scheme to promote export of agricultural and village industry products and is now being expanded to include additional products.
India has set a target of 160 billion dollars in exports by March 2008.