On Thursday (29 November 2007), Finance Minister Palaniappam Chidambaram informed the Parliament of a cut in import duties on certain textile fibres and offered to undertake a greater share of the interest burden on loans to help exporters squeezed by the appreciating rupee. The customs duty on polyester fibres and intermediaries would be reduced to 5% from the present 7.5%, and that on man-made fibres to 5% from 10%. There will be no change in the customs duty for nylon chips, nylon yarn, rayon grade wood pulp and acrylonitrile.
Chidambaram noted that the rising rupee has particularly hit those export sectors with low import intensity such as leather, textiles, handicrafts and marine products. Hence the goverment would provide an additional interest subsidy of 2% on loans taken by exporters of these sectors and some textiles.
Moreover, the minister added the government would also exempt storage and warehousing services, specialised cleaning services (fumigation and disinfection) and business exhibition from service tax.
Chidambaram also offered subsidy equivalent to 200 basis points cut in prime lending rates to exporters.
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