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Exporters seek FTP sops to regain markets
August, 25th 2009

Faced with intense competition in the shrinking global market for goods, exporters want the foreign trade policy (FTP), to be announced on Thursday, to provide for direct incentives-such as cash support and tax exemptions-to help them price their products better. Some claim that if the government does not do enough in the FTP to help them increase exports, they may lose some markets permanently.

India's exports plunged into the negative territory last October and has stayed there for the last ten months with the latest growth figures hovering around a negative 30%.

"We want a simple policy, one which is pin-pointed towards propelling export growth. Just a 2% subvention of interest rate on loans, that too for a limited period, will not help. The government has to first strategise to pull exports out of the negative zone and then work towards growth," Delhi Exporters Association (DEA) president S P Agarwal told ET.

According to Fieo president A Sakthivel, direct and indirect taxes considerably add to the cost of the export products in India. "A reduction in the taxes will help exporters to do their pricing competitively," he said.

Exemption from payment of taxes on all services utilised for export purposes is top on the list of demands of exporters. While exporters are allowed refund on a number of services availed by them, they want exemption from paying taxes on all services. Exporters also want quicker disbursal of refund of VAT (value added tax) paid by them.

Ficci has asked for a new Central scheme to rebate state and local levies on an average basis, till the proposed goods & services tax is in place. "Exports are already burdened with the incidence of state and local levies which for certain products in certain states may be as high as 5% - 6% of the export value of goods," Mr Sakthivel said.

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