The Indian government has cut import duties on some textile fibres in an attempt to provide some relief to companies hit by the rising value of the rupee against the dollar.

Finance Minister Palaniappan Chidambaram yesterday (29 November) announced plans to reduce the customs duty on polyester fibres and intermediaries from 7.5% to 5%, and on man-made fibres from 10% to 5%.

However, there will be no change in the customs duty for the raw materials used to make fibres, such as nylon chips, rayon grade wood pulp and acrylonitrile. Nylon yarn will also be exempt from the duty cuts.

The government has also said it will provide an extra 2% interest subsidy on loans taken by leather and some textile (including ready-made garment) exporters.

The rupee has risen more than 12% this year, helped by the booming economy, but this has made the Indian textile industry uncompetitive in the international market where it faces tough competition from China, Bangladesh, Pakistan and Sri Lanka.

The measures announced on Thursday are the latest steps in a relief package rolled out this year.

In July, the finance ministry provided additional relief to exporters, especially in the textile and apparel industries, to cushion the impact of rupee appreciation. The measures included lower interest rates and increased duty drawbacks.

Commercial banks were told to cut interest rates for exporters by 4.5 points from their benchmark prime lending rates, which vary from 11% to 12.5%

And duty drawbacks, under which exporters can claim a benefit on tariffs paid on raw materials imported for manufacturing, were increased from 10% to 17%.

Then, in September, India's Ministry of Finance ministry said it would refund the service tax that exporters pay for port, road transport and rail services.

The refunds covered service taxes incurred by exporters transporting goods from inland container depots to ports via rail and road networks, and for port services.

The government had been collecting a 12% service tax and an additional cess of 3% on these services.

Exporters are also eligible for service tax exemption for some input services - like those of solicitors and chartered accountants - that are used for export.