Govt OKs $125 mln interest subsidy for exporters
Reuters India, India
NEW DELHI (Reuters) – The Indian cabinet on Thursday approved an extra spending of 5 billion rupees ($125 million) to subsidise interest rates on loans for exporters, a government spokeswoman said, to help soften the blow from a firmer rupee.
“The measure will ensure mitigation of the effect of rupee appreciation across the export sectors and will … enable them to achieve export targets,” she said.
The move comes two days after India extended tax breaks to exporters to cover their transport and storage of goods.
The rupee had climbed more than 12 percent in 2007 against the dollar, squeezing the profit margins of export-led companies such textiles and marine products.
Last year, India set aside 3 billion rupees for a scheme where government shared the burden of exporters by paying 2 percent of the interest on their bank loans.
The scheme was for exporters in sectors like textile, leather, marine and handicraft that had slashed jobs because of dwindling profits.
India’s exports growth slowed to 16 percent in December from a year ago, compared with 27 percent annual rise in November, and analysts say the full-year export target of $160 billion would be difficult to achieve.