NEW DELHI, MAR 25: Commerce Minister Ramakrishna Hegde had a hour-long meeting with Finance Minister Yashwant Sinha to fine tune financial and revenue issues in the Exim policy modification, to be announced on March 31.The meeting between the two ministers lasted for 90 minutes last night spread over two sessions, official sources said today. Extension of nine per cent RBI pre and post-shipment credit to exporters further from March 31 is understood to have figured prominently during the discussions as it held key to boosting exports.The package, announced in October last as part of measures to spur exports by Hegde, expires on March 31 and RBI has already notified that the credit rate would be restored to the earlier 12 per cent.Sources said the Commerce Minister made a strong case for restoration of the package credit in the wake of turnaround in export growth. Exports have registered positive growth after a one-and-a-half years slump since November.Sources said cumulative exports up to Januaryhave turned positive in January due to the impressive performance. Hegde had said exports were expected to register double digit growth in February, while being optimistic of achieving the revised 4-5 growth target.A scheme to provide amnesty to exporters for failing to meet export obligations also figured in the talks. The scheme is aimed at reducing litigation and mopping up revenue locked in disputes over non-fulfilment of obligations under advance import licence and export promotion capital goods scheme.The issue of utilising unused credit accumulated in the duty entitlement passbook (DEPB) scheme against excise payment was also discussed. Exporters feel that they should be allowed to purchase inputs locally, if available, instead of importing them under the DEPB scheme.Thus foreign exchange could be saved and such a move would give impetus to the domestic industry, they say. Hegde also discussed with Sinha administrative issues, especially customs bottlenecks. These bottlenecks are unnecessary,according to the commerce ministry, which feels customs role should be changed to that of a facilitator instead of regulator.He also discussed concessions for exports in the background of Sinha being opposed to any increase in incentives extended by the government. The issue of allowing zero-duty import of inputs for exports was also raised by Hegde.Sinha had in the budget for 1999-2000 slapped duties on all items which had so far not attracted any customs duty.Meanwhile, the Federation of Indian Export Organisations (FIEO) has expressed shock at the Reserve Bank of India's decision to raise the interest on pre-shipment and post-shipment export credit from 9 to 10 per cent from April 1. The move, FIEO felt, would adversely affect the country's export performance and urged the finance ministry and RBI to reduce the rate to 7 per cent from April 1 to a reasonable period - at least up to March 31, 2000.The RBI had reduced the interest rate on export finance in rupee terms from 11 to 9 per cent onAugust 6 to remain valid till March 31, 1999. The reduction did not at all help exports and in fact the performance had been dismal in the last one year.At the time of presentation of the 1999-2000 budget, the Finance Minister had announced that the existing scheme of export credit in foreign currency was being revamped at internationally competitive rates and bring about major simplification of procedures.But the RBI had announced the interest rate at 1.5 per cent over LIBOR which would in reality work out to not less than 13.5 per cent because of the loss at the initial stage of purchase of foreign currency and after adding the dollar hedging cost to the rate of interest to be paid to the banks.
