JOIN USThe government may take some measures in the Budget on Thursday to boost India’s falling exports and pare the widening trade deficit, which has largely contributed to an uncomfortable current account deficit and impacted the rupee.
One of the measures could be creation of an export development fund as suggested by the export body Federation of Indian Exporters Organisation (FIEO) along with other steps to make credit available at affordable rates to exporters.
The expansion of the interest subvention scheme, which gives exporters two percentage points discount on bank lending rates, could be in the offing as India’s outward shipment struggles in the wake of slowing demand in traditional markets of Europe and the US.
In a pre-budget proposals, industry and exports organisations had vigorously pursued the cause of exporters and had even gone on suggesting measures like withdrawal of minimum alternate tax on export-linked Special Economic Zones.
Commerce Ministry has also in the past weeks urged the finance ministry for lowering of MAT on SEZs in the Budget as it has dented the country’s image as an attractive investment destination.
Large corporates have got some of their SEZs denotified either fully or partially after the government imposed a MAT of 18.5 per cent on SEZ units and developers in 2011-12.
“The finance minister is viewing the suggestions of the industry and export bodies seriously in view of the current fall in India’s exports,” an official in the know of the development said.
The export body had also suggested that axes such as VAT, sales tax on petroleum products and Octroi should be refunded to the exporters to give them benefits at the time of slowdown.
Alternatively, an access to external commercial borrowing (ECB) window to micro, small and medium enterprises was also suggested to the finance minister during the pre-budget discussions.