Rupee-hit exporters left guessing

Exporters expecting bail-out sops in the Budget to help them cope with the rising rupee are disappointed. While there are expectations that some incentives like an extension of interest subvention for certain sectors could be notified later, exporters feel that the budget has not done anything to boost their sagging spirits.

FIEO president Ganesh Kumar Gupta said problems faced by exporters due to the appreciating rupee and stagnating traditional markets were not addressed by the Budget at all. "The proposal to provide zero rating of exports through refund of state taxes and local levies, exemption from fringe benefit tax (FBT) on genuine business expenses and 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.

Delhi Exporters Association president S P Agarwal questioned finance minister P Chidambaram's claim that Rs 8,000 crore has been given to exporters in three tranches to help them come out of their present crisis. "We have no idea where he has spent the Rs 8,000 crore he mentioned. We have heard only of a package of Rs 1,400 crore out of which Rs 600 crore was a refund of dues to exporters for their deemed exports. The remaining Rs 800 crore was given in the form of increment in the drawback rate with retrospective effect from April 1. This has not yet been fully given to exporters," he said.

Mr Agarwal also brushed aside Mr Chidambaram's argument that the interest cost of sterilisation through market stabilisation bonds estimated at Rs 8,351 crore for the year was, in a way, subsidy to exporters. "We cannot make any sense out of this claim," he said.

He added that the government should have created an exchange contingency stabilisation fund to give some cushion to exporters from the fluctuating value of the rupee. The rupee appreciated by about 14% against the dollar in the last calendar year rendering exports with low import content uncompetitive in the global market. FIEO pointed out that the FM had also ignored the demand for forming an export marketing fund for the small and medium sector which was hit most by the drying up of export orders.

Although the textiles sector did get some sops in the budget, exporters say that it was not enough. Increase in allocation for textiles upgradation fund and integrated textiles park besides mega clusters schemes for handloom and handicrafts would not provide immediate support to textiles sector which is need of the hour, exporters feel. "Zero import duty and excise duty on machines could have encouraged fresh investment as also mordernisation, both critical for improving competitiveness of this sector," AEPC chairman Rakesh Vaid said.

The only silver lining for the export sector is the gradual move towards GST by reducing excise duty from 16% to 14% and few concessions given to sports goods and gem and jewellery sector through reduced customs duty on their inputs.