New Delhi, Oct. 11: Exporters are hoping for a relief in duty drawback rates as a hedge against the rising rupee. The Indian currency has appreciated to a year-high of 46.34 against the dollar sparking fears of a contraction in exports once again.
“This is a double blow for exporters. We are taking a beating again. First, recession in the US and Europe, and now the rupee has appreciated at a time when the market is highly price sensitive,” said A. Sakthivel, president of the Federation of Indian Export Organisations.
“We hope the government announces a five per cent duty drawback in all segments. This will enable us to take on competition,” he said. Exports had contracted earlier this year because of a drop in orders from the West.
A three-member committee, set up by the government to review the duty drawback rates, recently submitted its report to the finance ministry.
Under the duty drawback scheme, the finance ministry reimburses central government duties, including customs and excise levies as well as service taxes paid on inputs used in the manufacture of export items.
The rupee ended the week at 46.34 against the dollar, its highest since September last year. The Indian currency has risen 3.8 per cent in October driven by net foreign buying of domestic stocks since the middle of last month.
Analysts said the rupee had appreciated on expectations of more capital inflows into the economy. Besides, the dollar has weakened against a range of currencies.
Textile exporters, who have been betting on Christmas sales, are now apprehensive as their orders are booked in dollars. Analysts have predicted a further rise in the rupee, which is expected to end the fiscal at around 44 against the dollar.
Rakesh Vaid, chairman of the Apparel Export Promotion Council, said, “The country should have a stable currency for the exporting community to compete, especially against China, in the global market.
“The government should come out with incentives and dollar credit to help the exporters to be competitive especially at a time when we are yet to fully recover from recession,” he said.
Source : telegraphindia