Budget likely to have incentives for exporters

Exporters community hit hard by the economic meltdown in key markets like the US and the Europe can expect some incentives in the Budget.

Export promotion councils and the Federation of Indian Export Organisations (FIEO) had met Finance Minister Pranab Mukherjee and Commerce and Industry Minister Anand Sharma seeking incentives, including credit at 7 per cent interest rate and income tax holiday for five years.

Impacted by drastic fall in exports in the second half of 2008-09 due to global downturn, the country's merchandise exports grew just 3.4 per cent to $168.7 billion. But the shipments have been dropping for eight months in a row since October 2008, costing 5 million jobs, as per FIEO estimates.

"Looking at high credit rate in India, export credit should be given at 7 per cent across the board without linking it with prime lending rate," exporters body FIEO has said, adding interest subsidy scheme should be extended till 2012.

Exporters say they are working on thin margins and taxation of the profit leaves them with no money for modernisation and expansion of manufacturing facility.

"Income Tax exemption for five years will add to their competitiveness as this benefit will make our products more competitively priced," FIEO President A Sakthivel said.

On the complaints received about high transaction costs, Commerce Secretary Rahul Khullar had said the Foreign Trade Policy likely in August would deal with such concerns.

The exporters community is also expecting the government a Rs 5,000 crore fund to support entrepreneurs in the MSME sector, enhancement of DEPB and drawback rates by 5 per cent and removal of the Fringe Benefit Tax.

A parliamentary panel has suggested that the Centre should formulate a policy to help in improving basic infrastructure facilities at airports and ports for promoting exports.