The Hindu : Business : FM hints at tax relief for employment-intensive exports

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Friday, Dec 22, 2006
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FM hints at tax relief for employment-intensive exports

Special Correspondent

Exporters want DEPB, TUF schemes to be continued

— PHOTO: V. V. KRISHNAN

BALANCING ACT: Union Commerce Minister, Kamal Nath, and Finance Minister, P. Chidambaram, at an interactive session with chairmen of export promotion organisations in New Delhi on Thursday.

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NEW DELHI: Finance Minister P. Chidambaram on Thursday hinted at the possibility of certain high employment-oriented export sectors being granted major tax incentives in the budget for the new fiscal.

Speaking to newspersons at the first ever pre-budget joint interaction with exporters, which was convened by Commerce Minister Kamal Nath here, Mr Chidambaram said, "some bold steps can be taken for the high employment generating sectors.'' "Wait for the presentation of the budget [2007-08],'' he said, when asked what the concessions were likely to be.

Even as the Finance Minister refused to divulge any further details, Ministry officials indicated that the sectors likely to benefit, among others, were textiles, readymade garments, leather and gems and jewellery.

During the interaction with the two ministers, exporters urged the Government to ensure continuance of the `Duty Entitlement Passbook Scheme' (DEPB) and the `Textile Upgradation Fund Scheme' (TUFS), as also removal or rationalisation of levies that erode the global competitiveness of Indian exports.

The Federation of Indian Export Organisations (FIEO) and several export promotion councils (EPCs) also sought complete exemption from the four per cent Central Sales Tax (CST) as it rendered exports less competitive.

The interactive session was attended by Commerce Secretary G. K. Pillai, Secretary, Industrial Policy and Promotion, Ajay Dua, and Revenue Secretary K. M. Chandrashekhar, along with the Director General of Foreign Trade (DGFT), B. S. Meena, chairpersons of all the EPCs, FIEO, and the commodity boards. Responding to the suggestions, Mr Chidambaram said: "I recognise the validity and merit of the exporters' suggestions. These will be examined and appropriate decisions will be taken," while noting that his responsibility as the Finance Minister was to balance the interests of exporters, industry and revenue.

Mr. Kamal Nath too stressed the need to balance the exporters' requirements with the interests of the domestic industry to facilitate the growth of both the sectors. Pointing out that employment generation and competitiveness were the two principal challenges of the export sector, the Commerce Minister urged the exporting community to "look ahead and strategise to avoid being overtaken by emerging new competitors in the global market place.''

To a query on the widening trade deficit, Mr Chidambaram said: "Trade deficit is not a cause for worry. I can live with the current account deficit. I want the importers to import what they want and our exporters to export as much as they can."

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