Exporters hail budget but ask for more

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SME Times News Bureau | 27 Feb, 2010
Although the extension of the concessional export finance regime for select exporters for one more year in the new budget has come as a relief to the global slowdown-hit sector, especially the SMEs engaged in exports, the India Inc still feels that more measures could have been taken to boost the sector.

The Federation of Indian Export Organisations (FIEO), while welcoming the move for extending 2 percent interest subvention for exports for one more year, said that the exclusion of textiles, leather, marine and gems and jewellery from the extended scheme add to the woes of these sector as some are still showing decline while other exhibited growth on very low base.

FIEO President A Sakthivel also urged that the concern of exporters particularly SEZ units should be addressed before introducing of the Direct Tax Code from FY 2011. The government should have come with road map to force the issue, the FIEO chief added.

Union Finance Minister Pranab Mukherjee, while presenting the General Budget 2010-11 on Friday, proposed to extend the concessional export finance regime for select exporters for one more year till March 31, 2011.

"I propose to extend the interest subvention of 2 percent for one more year for exports covering handicrafts, carpets, hand-looms and small and medium enterprises (SMEs)," Finance Minister Pranab Mukherjee said while presenting Budget for 2010-11.

The interest subvention scheme, which was to expire on March 31, 2010 had earlier been extended till March 31, this year with a view to insulate the employment-oriented sectors like hand-looms, handicrafts, carpets and leather, from the impact of demand slowdown

Meanwhile, the Apparel Export Promotion Council (AEPC), while welcoming the initiatives of interest subvention on export credits, said that the finance minister turned down exporters' plea for exemption of service tax, rather than claiming refunds.

The refund procedure being so cumbersome, hardly any exporter has been able to get the same so far, AEPC Chairman Premal Udani said.

He further added that the increase in excise duty coupled with about Rs 2 increase in prices of petrol and diesel will substantially increase raw material and input costs which will further suffocate the industry already struggling mainly on account of high costs.

"The budget has failed to give a thrust to the textile and clothing industry which generates the largest employment after agriculture," Udani added.

The Export Promotion Council for Handicrafts (EPCH), reacted favourably to the budget for extending the concessional export finance regime for handicrafts sector for one more year.

"Union Finance Minister Pranab Mukherjee's announcement for extending the interest subvention of 2 per cent for one more year is considered as a relief to exporters of handicrafts, handlooms, carpets and small and medium enterprises," said EPCH Chairman Raj Kumar Malhotra.

However, he expressed his disappointment for not considering the major issues of Section 10B (A) relief for exemption of Income Tax for handicraft exporters. The overall impact of the Union Budget is not labour-intensive sectors friendly such as handicrafts exports, he added.