In a bid to provide respite to exporters reeling under the effect of rupee appreciation, the government today announced a Rs 1,400-crore package that contains increased rates of duty drawback with effect from April 1, 2007.
This is a significant move on the government's part considering that the hike in duty drawback on almost all products will cost the exchequer Rs 800 crore. At the same time, the government will bear another Rs 600 crore to provide two percentage point subvention to banks so that they can provide concessional credit to exporters in certain sectors.
"The drawback rates have undergone significant changes in line with changes in the prices of inputs and duties. The rates have been revised upward on nearly all products," Finance Secretary D Subbarao told reporters.
To further elucidate Subbarao's point, Finance Ministry officials gave the example of knitted shirts, which will now have a new drawback rate of 10 percent with a cap of Rs 48 per piece instead of the existing rate of seven percent with a cap of Rs 31 per piece.
The officials also highlighted measures for exporters in textiles, readymade garments, leather and handicraft sector.
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