Finance minister P Chidambaram on Thursday proposed tax incentives to increase shipments of labour-intensive sectors such as leather, much to the cheer of exporters.
"I look forward to the changes that will be made to the Foreign Trade Policy next month and I assure my support to measures that will be taken to boost exports of goods and services," he said in his Budget 2013-14 speech.
For leather sector, the minister proposed to reduce the duty on specified machinery for manufacture of leather and leather goods, including footwear, from 7.5% to 5%.
"To encourage exports, I propose to reduce the duty on pre-forms of precious and semi-precious stones from 10% to 2%," he said.
Federation of Indian Export Organisations (FIEO) director general Ajai Sahai said the measures announced will help in boosting the exports from the labour-intensive sectors.
"The tax sops will help in increasing the competitiveness of apparel, leather and precious and semi-precious stones. It will also help in creating more jobs," Apparel Export Promotion Council chairman A Sakthivel said.
In order to boost de-oiled rice bran oil cake, the minister proposed to withdraw the export duty.
"Export duty on de-oiled rice bran oil cake has made our exports uncompetitive. Hence, I propose to withdraw the said duty," he added.
The minister said global economic growth slowed from 3.9% in 2011 to 3.2% in 2012 and India is not unaffected by what happens in the rest of the world.
"India is part of the global economy. Our exports and imports amount to 43% of GDP and two-way external sector transactions have risen to 108% of GDP," he said.
Expressing worry over the widening current account deficit (CAD), he said: "the CAD continues to be high mainly because of our excessive dependence on oil imports, the high volume of coal imports, our passion for gold, and the slow down in exports".
During April-January 2012-13, the country's overseas shipments shrunk by 4.86% to $239.6 billion. Trade deficit widened to around $20 billion in January, the second highest figure ever in a month.