Rs.6,000 cr package for Textile Mills & Powerlooms

The government has approved a debt restructuring package for integrated textile mills and a modernisation scheme for the powerloom sector. The package envisages repayment of loans to banks and financial institutions amounting to Rs.6,000 crore at 8-9 percent over five years by the mills. Both the schemes come into effect from September 15, 2003. The decentralised powerloom sector will be made eligible for loans under the technology upgradation scheme with direct interest subsidy of 12 percent to 20 percent.

Announcing the schemes, textiles secretary Shri S.B. Mohapatra and banking secretary, Shri N.S. Sisodia told a news conference in New Delhi on September 09, 2003 that the package would be applicable to around 350-400 composite/integrated textile mills out of a total of 1,864 mills in the country.
Duty Drawback Norms Amended

In a bid to step up exports, the revenue department has eased the norms for fixation of brand rate and special brand rate of duty drawback. The Central Board of Excise and Customs (CBEC) has done away with the Rs.5 lakh limit and permitted additional/joint commissioners of Central excise to approve drawback without any limit.

Brand rate of duty drawback is given to exporters of those products which do not figure in all industry rate (AIR) of drawback table. The special brand rate is given for export of those products whose rates are considered to be insufficient to fully neutralise incidence of duties suffered on the inputs utilised in the production/manufacture of export product. An exporter can opt for brand rate duty drawback scheme.

Under the scheme, exporters are compensated by refund of the amount of customs and central excise duty incidence which is actually incurred on the inputs used in the manufacture of export products. The exporter, however, has to produce documents/proof of actual quantity of inputs utilised in the manufacture of export product alongwith evidence of payment of duties.

The CBEC, as part of the decentralisation and trade facilitation exercise, has directed its field formations not to submit proposal for fixation of brand rate of drawback to the commissioner of central excise for approval. Earlier, the brand rate of duty drawback was fixed by the ministry.

Referring to specific issues pertaining to fixation of brand rate of drawback for finished / lining leather, the CBEC has clarified that while computing the drawback for leather articles, including footwear, the AIR available on finished/lining leather should be considered on the consumption of finished/lining leather in the export product. This is being done to ensure that the duties on inputs like finishing chemicals, pentrating agents, wattle extracts and leather dyes and auxiliaries used in finishing raw hides are relieved.

It was further clarified by the CBEC that in case of complete bicycle, manufactured by using various cycle parts and also certain other accessories/parts, not listed under drawback schedule, the brand rate could be allowed in respect of such extra parts/accessories, provided that these parts/accessories are procured on payment of duty and not imported duty free under the advance licence/DFRC/DEPB Scheme.

Q1 Trade Deficit $5 bn as exports Dip

Exports recorded a 9.29 percent growth during the April-July quarter, marking a decline over the 11.06 percent increase seen upto the first quarter. Imports rose by 22.73 percent pushing up trade deficit to nearly $ 5 billion, more than twice as much as the figure during the corresponding quarter last fiscal. Commerce ministry officials have attributed the fall to the continuing appreciation of the rupee vis-a-vis dollar, the prevailing global slowdown, and China’s fixed exchange rate.

States allowed to refinance maturing bonds

The finance ministry has decided to allow states to borrow from the open market to meet the redemption pressure on guaranteed bonds subscribed by individuals and provident funds during the next three years to protect the interests of small investors.

According to finance ministry officials, individual and provident fund subscriptions to state-guaranteed bonds, due to mature in the next three years, was to the tune of Rs.4,600 crore.

The officials said about Rs.15,800 crore was due to mature during this fiscal and the next two years.

While individuals and provident funds accounted for almost 30 percent of this, the balance was subscribed to by public sector banks, co-operative banks and financial institutions.

Since defaults by states could have a negative bearing on sovereign credit ratings, a committee headed by additional secretary in the finance ministry Shri B.P. Mishra, set up in March 2003, recommended a two-pronged strategy to prevent any adverse fallout when such state government guaranteed bonds matured in the ensuing three years.

The ministry has decided to allow states to issue redemption bonds to banks and financial institutions that had subscribed to state guaranteed bonds. These bonds will carry the prevalent rate of interest, significantly lower than their existing coupon rates.

The ministry has simultaneously cleared a proposal to set up a sinking fund, to which the Centre will initially contribute Rs.1,000 crore. States will earmark 5 percent of their net small savings towards this fund.

Achievement-motivated people are not gamblers. They prefer to work on a problem rather than leave the outcome to chance