FIEO dismayed at lack of incentives in budget

By Our Special Correspondent

NEW DELHI, MARCH 9. The Federation of Indian Export Organisations (FIEO) has expressed dismay at the failure to announce any incentives for exports in the budget proposals for 2001-2. This is despite the excellent performance of the exporting community in raising exports by over 20 per cent. ``Instead of being encouraged, Indian exporters are feeling let down and demoralised'', said FIEO president, Mr. K.K. Jain, in a letter to the Finance Minister, Mr. Yashwant Sinha.

In fact, he pointed out that several disincentives have been included in the budget such as the proposed levy of tax on the service sector and the high excise duty on branded garments. In the case of the service tax, he noted that this will be levied on insurance, banking, financial and port services thus adding to transaction costs and make exports non-competitive. The transaction costs of Indian exports are already high at 18 per cent and despite setting up of a high-power committee, nothing had been done to bring down these costs.

As for the 16 per cent levy on branded garments, the FIEO chief said it would hit the apparel export industry very hard as garment exporters will become uncompetitive in this highly competitive market. ``I am sure you have no intention of discouraging exports and I therefore submit that this excise duty of 16 per cent should be waived'', he submitted.

The FIEO pointed out in the letter that unless exports are treated as a national priority, the country's share in world trade would continue to languish around 0.65 per cent. Unless small and tiny enterprises were encouraged to compete with other countries, exports would remain confined to certain traditional commodities. Even the WTO provided incentives by way of tax exemption, and subsidies to developing countries like India, it noted.

The FIEO has thus called upon the Finance Minister to restore the income tax exemption under section 80 HHC and export credit rates to bank rates. It has also urged that income tax should be directed to ensure correct interpretation of section 28(i) and (ii) and section 80 HHC to prevent harassment to exporters. It has also stressed the need for implementing suggestions made by the committee on transaction costs to simplify procedures relating to excise, customs and duty drawbacks to make them simple and cost-effective.

The FIEO stressed that Indian exporters do not seek subsidies or exemptions but want a ``level playing field'' to enable them to compete with other countries.

Send this article to Friends by E-Mail

Section  : National
Previous : Pritish Nandy granted bail
Next     : Govt. initiates dumping probe against Ukraine