As the rupee is showing no signs of reverting the appreciation trend which started since early this year adversely affecting exporters, including the pharma exporters in the country, the Union Commerce Minister Kamal Nath has convened a meeting of export councils in the country to address the issue of how to find a way to offset the losses being incurred by the exporters due to the unprecedented rupee appreciation.

Kamal Nath will meet the chairmen of all the export councils on June 13 in New Delhi. Before that, the Jt Secretary, Commerce Ministry, Rajiv Kher has convened another preliminary meeting in New Delhi on June 12 to make the preparations for the meeting. Pharmaceutical Export Council (Pharmexcil) chairman Dinesh Modi will represent the pharma industry in the meeting.

The Commerce Minister has asked the chairmen of the export councils to prepare a list of measures for the consideration of the government to save the industries from incurring further losses due to the rupee appreciation.

Modi said that the Pharmexcil has prepared a list of suggestions which need to be implemented on war footing in view of the alarming situation created by the strengthening of rupee vis-à-vis US dollar. "The situation has not gone out of control at present. However, if urgent remedial measures are not taken, then there will be wide ramifications on the employment scenario as well as future growth", Modi said.

He said the rate of interest on pre and post shipment packing credit should be 5 per cent per annum instead of the present 7.5 per cent for all domestic tariff area exporters. This can be implemented by way of a special purpose vehicle through the Ministry of Commerce and Industry by the leading nationalised banks. Another suggestion is that the RBI should give a higher rate while purchasing currency on export realisations from the exporters so as to adequately compensate for the appreciation rupee.

The Pharmexcil will also suggest to the Minister that the IT exemptions granted to the export oriented units (EOUs) should be extended till March 31, 2014 which otherwise is due to expire on March 31, 2009. Another suggestion is that the post shipment packing credit should be increased upto 360 days instead of the present 180 days and it should be permitted at the interest rate of 5 per cent per annum.

Modi said that the exporters should be allowed to raise external commercial borrowings (ECBs) against their further exports. This will enable them to bring down the cost of funds for raw material, packing material, etc borrowed through ECBs. He also said that the exporters should be permitted to utilise the DEPB script for raising the credit in CENVAT account as an option.

The Pharmexcil will also suggest to the Commerce Minister to hike the DEPB rate as there are very high transaction costs involved in the export activity. Another suggestion is the exporters should be paid interest at the LIBOR rate.