The package is expected to step up export growth which touched a low of 2.6 per cent for 1997-98 and fell further by 7 per cent during the first quarter of 1998. Making the statement in the House, Hegde hoped that the measures would help exporters reverse the poor trend in exports and overcome the recession forced by the South Asian currency crisis and the slowdown in world markets.

In a major initiative, the ministry today announced a two per cent cut in pre and post-shipment export credit, bringing the rate down from 11 per cent to 9 per cent. The cut in interest rates will be effective till March 31, 1999 as a specialtemporary promotional measure. This had been one of the biggest demands of the exporters, for parity with global exporters in credit rates. The Reserve Bank did announce a 6.5 per cent interest rate earlier this year, for incremental exports, but had to withdraw it in the face of criticism from industry that in a recession-hit global market it would be virtually impossible for any sector to record incremental exports.

The government will also pay an interest on its dues to exporters starting September 1. Under the duty drawback scheme, the interest will be payable on delays of over two months from the date of the shipping bill while in the case of refund of terminal duties, the two months will be counted from the date of payment of duty. However, the necessary papers will have to be filed by the exporter within 15 days of executing the export.

The package also permits manufacturer-exporters with at least a year of unblemished export record to furnish legal undertakings instead of a bank guarantee to thecustoms as security for import of duty-free raw materials. Such exporters will also be allowed to clear goods from Customs through self-certification.

In a boost to the software sector, which has recorded a 35 per cent growth last year, the government has also decided to extend the export promotion capital goods (EPCG) scheme to software technology parks. The exports of the member-companies will be treated as the export obligation of the park itself.

The package has also mentioned a special package for electronics hardware exports, which alone recorded a fall of 60 per cent last year. Exporters who are qualified to give bonds to excise and customs bond officers, will henceforth have to furnish a single mother bond valid for a year, to fulfil all obligations instead of the current practice of furnishing bonds for every transaction. This is expected to cut down procedures that often delay exports.

Responding to the demands of export-oriented units, the government has decided that the tax holiday for allsuch units, including those in the export processing zones would be increased from five years to 10 years. In addition, EOUs will be permitted sub-contracting facility in the domestic tariff area.

In an effort to broad-base exports to high technology sectors, the government has announced that bio-technology industries and small-scale engineering units will henceforth be entitled to the benefit of zero duty EPCG with a threshold of one crore.

The duty on mobile cooling equipment and other cold chain equipment will be reduced to give a boost to the floriculture, agriculture and food processing sectors which now suffer losses from the lack of such infrastructural facilities.

According to official estimates, nearly two-thirds of all export items have reported positive growth while about 30 major export items constituting around 25 to 30 per cent of the export basket, have shown substantial fall. While cotton yarn and fabrics exports fell 20 per cent, man-made fabrics fell 35 per cent and transport equipmentby about 20 per cent.

BONANZA FOR EXPORTERS