Reeling under an erosion of margins in the wake of a persistently appreciating rupee, Finance Minister P Chidambaram offered some comforting words for the exporting community but did not offer any direct fiscal concession.
“Government is sensitive to the needs of the export sector and will continue to respond sympathetically as the situation demands,” Chidambaram said.
The finance minister said that the government has already extended fiscal relief amounting to over Rs 8,000 crore in three tranches in the last few months.
“The interest cost of sterilisation through market stabilisation bonds, estimated at Rs 8,351 crore for the whole year, is in a sense a subsidy to the export sector,” he said.
Merchandise exports have come under some pressure due to the rupee’s appreciation and could fall just short of the target of $160 billion.
India’s exports stood at $111 billion in April-December 2007. The rupee has appreciated by 12 per cent in 2007.
Labour intensive industries such as textiles, handicrafts and food and agro products have been badly hit in the last 12 months. Federation of Indian Export Organisation President Ganesh Gupta said the budget has not addressed the problems faced by the exporters.
“The proposal to provide zero rating of exports through refund of states and local levies, exemption from fringe benefit tax on genuine business expenses, exemption from all service taxes on services used during the course of exports to provide a level playing field to Indian exporters have not been considered,” Gupta said.