New Delhi: In a bid to grant relief to the exporting group that has been making loud demands for assistance against the intense growth in the Indian currency versus the U.S. dollar, the Centre expanded the span of service tax refund to exporters and also extended the number of spheres entitled for inferior interest rates on pre-shipment and post-shipment credit.

Alongside, exporters will be capable of earning interest on their foreign currency accounts that will go a long way in justifying their severities exhaling from the rupee admiration.

Hereafter, exporters will be repaid the taxations paid on seven services as against the four services allowable previously.

The three new services being admitted in the tax relief system include technical testing and analysis, general insurance and inspection and certification. It may be recalled that in September, the Centre government had declared duty exemption on services provided by ports, road transport and railways.

As an additional help to exporters, the administration has also allowed interest payment on sums up to a maximum of $1 million kept in ‘Exchange Earners Foreign Currency’ (EEFC) accounts. But, the interest rate to be paid on such deposits is to be determined by the banking institutions.

According to a Finance Ministry statement, the interest payment facility would be valid up to October 31, 2008. “Such accounts should be in the form of term deposits, with a maturity of one year,” the statement added.

These standards are likely to offer incomplete relief to exporters whose business margins have been eroding due to rupee appreciation. Above all, the rupee appreciated to a record peak of Rs 39.36 against the US dollar, which is the highest ever since March 1998.

As for the assuagement on pre- and post-shipment credit, a total of 12 segments have been made eligible for the reduced interest rate that is 4.5 per cent lower than the standard prime lending rate (PLR). The beneficiary sectors now comprise readymade garments, jute and carpet, textiles with handloom, leather products, toys, processed farm products, handicrafts, engineering products, marine goods, solvent extracted de-oiled cakes, sports goods, plastic and linoleum and small and medium enterprises (SMEs).

Kamal Nath, Commerce and Industry Minister said that Prime Minister has asked the Economic Advisory Council Chairman, C. Rangarajan, to indicate new modes of aiding exporters, despite asking him “to submit a report on slowdown in industrial activity within a month.”