NEW DELHI, Apr 14: Expresssing serious concern at the high Current Account Deficit(CAD) and the widening trade gap, apex industry body ASSOCHAM today suggested total exemption of export income from the income tax at least for a period of three years or till the time merchandise exports cross 500 billion dollars.
‘The Commerce Ministry, which is giving final touches to the annual supplement of the Foreign Trade Policy (FTP) should press for exemption to the export income.’
Associated Chambers of Commerce and Industry of India (ASSOCHAM) said in a statement. The exemption to export income should also be given to the services exports, it said. The chamber said the situation on the export front, as highlighted by the Reserve Bank of India, calls for extra-ordinary steps as the current level of CAD of 6.7 per cent of the Gross Domestic Product is not sustainable.
Even if CAD finally works out to five per cent of the GDP for the entire financial year of 2012-13, it cannot be sustained, especially when exports remain subdued and fund inflows into the stock market have become uncertain.
‘At least in the third quarter of the FY 13, the FIIs came handy for financing the CAD. The situation has now changed with the FIIs turning out to be net sellers. While the export deceleration seems to have bottomed out, nothing is certain as yet as almost entire European market is not turning around giving a big setback to mainline export items like engineering goods,’ ASSOCHAM said.
It said achieving the ambitious target of 500 billion dollars by FY 2014-15 ‘looks next to impossible’ under the given global scenario.
Even the World Trade Organisation has projected a sluggish world trade growth of only 3.3 per cent in the year 2013 as the economic slowdown in Europe continues to suppress demand for imports in the economically troubled continent. The world trade had fallen to just about two per cent in 2012 from 5.2 per cent in 2011. (UNI)
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