Second Indian Stimulus Package On The Cards, Says Nath

by Lorys Charalambous, Tax-News.com, Cyprus

31 December 2008

India's Trade Minister, Kamal Nath recently trailed the planned introduction of a second stimulus package, this time containing measures expected to benefit small and medium-sized enterprises (SMEs), exporters not targeted by earlier initiatives, and the real estate sector.

Nath also hinted that further duty cuts may be on the cards.

Earlier this month, the Indian government unveiled a plan designed to stimulate the country's economy, comprising tax and other measures.

In addition to various measures taken to increase liquidity within the banking sector, the government announced at the time that:

"As an immediate measure to encourage additional spending, an across-the-board cut of 4% in the ad valorem Excise Tax rate will be effected for the balance part of the current financial year on all products other than petroleum and those where the current rate is less than 4%."

In order to bolster the export sector, pre- and post-shipment export credit for labour intensive exports, such as textiles (including handlooms, carpets and handicrafts), leather, gems and jewellery, marine products would benefit from an interest subvention of 2% until the end of March 2009, subject to a minimum rate of interest of 7% per annum.

The Indian Trade Minister was quoted by Reuters as confirming last week that in the forthcoming package:

"We are looking at financial, some liquidity issues, export, and something to stimulate demand. Realty also."

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