Government is working on a mechanism to refund state level taxes to despondent exporters that may include adjusting the duties against states outlays, Commerce and Industry Minister Kamal Nath said on Thursday.
"While we have to see that taxes are not exported, the Centre cannot refund state level levies and taxes. We are working on a mechanism to give exporters some amount of benefit by refunding what has been paid by the producers," he said on the sidelines of a PHD Chamber function in New Delhi.
Nath said either states should refund the taxes or the Centre would adjust it against assistance extended to them. A level-playing field has to be ensured for exporters, he said, adding that taxes should be refunded to them and the burden should not be transferred.
Speaking at the function, Nath said there has to be a competitive atmosphere between states. "States have to attract investments by good governance. The business community is sometimes too Central Government centric. We have to ensure that state governments are sensitised in the process," he said.
The process of economic liberalisation and globalisation are intrinsically linked with good governance, which would go a long way in building necessary social capital needed for promoting growth, he said.
Finance Minister P Chidambaram had also made a case for states extending support to exporters who have been hit by an appreciating rupee.
Speaking at the National Development Council meeting on Wednesday, Chidambaram had said the Centre has already extended about Rs 5,200 crore relief packages to exporters and now the states should compensate the rupee-affected entities by refunding duties like VAT, octroi and electricity charges.