"The Budget holds nothing for us for the simple reason that the finance minister doesn't know what he is doing," says Sunil Ahmed of Ahmed Rice Products. "Reliefs announced in some selected areas in the Budget have been countered by increase in duties in other areas." He adds that while the reduction in banking rates for the SSI sector is welcome, nothing else has been done to encourage exports.

When there has been a slowdown in the growth of exports, the government's apathy cannot be explained, saysAhmed. "With the present stagnation in the international market, I don't know how to expand my business and the government has shown that it doesn't care whether I do or not."

The Delhi Exporters Association (DEA) has denounced the Budget by calling it an `export demotion Budget.' S P Agarwal, president, said that the levy of 8 per cent special import duty with the provision that it will not be refunded as duty drawback is an unprecedented measure and will adversely affect exports.

Explains Ramu S Deora, president, Federation of Indian Export Organisation (Fieo): ``Instead of giving relief to exporters, additional burden of 8 per cent special import duty has been imposed which in effect becomes 12.75 per cent. This, coupled with a fall in the value of rupee from Rs 38 to Rs 42 against a dollar, leads to an 11 per cent extra burden on exporters compared to last year."

Reaching the 20 per cent export growth rate set for current financial year may be impossible, fears Deora. To prevent revenue leakage andalso see that the exporters are not adversely affected, adopting an exchange mechanism, instead of tariff mechanism, could be the way out, suggests Deora. According to Fieo, the total disability factor faced by an Indian exporter is in the region of 26.40. Ajay Malhotra of Anujay Computer Embroideries feels that the additional duty on imports will act as a setback for the manufacturers who depend on imported machines. Malhotra does embroidery work on imported machines. "There is no alternative for us as the machines are not available domestically. The 8 per cent duty will have to be borne by us."

Malhotra says that he was looking forward to some incentives for the ancillary units like fabricators and embroiders who contribute a lot to exports but don't get any benefits. "Some tax benefits should have been given to us in recognition to the contribution we make to exports, but in this Budget too we were ignored."

Another long-standing problem of exporters, i.e., streamlining of drawback payments, has beenignored in the Budget. Agarwal says that despite the promise of the finance minister that interest will be paid on delayed drawback payment, no exporter has been given the amount. Moreover, demand for non-availability of Modvat certificates is adding to exporters' problems. Says Agarwal, "The officer who issues the certificates charges any thing between Rs 500 and Rs 10,000 for it." Instead, says Agarwal, the government should ask the excise department to supply the list of the exporters who are availing Modvat and give drawback to the rest. "Despite the government's claims to doing away with inspector raj, it is not interested in attending to the problems to the daily problems we are facing."

On the face of declining growth of exports, the DEA had asked for the revival of the Cash Compensatory Scheme (CCS) in the Budget to give a push to exports. The scheme had been introduced in the early sixties in which the government used to give cash support to the exporters based on total exports as a partial refundfor the various indirect taxes levied. It was withdrawn some years back. Says Agarwal, "The cash relief given by the government had always helped to increase exports in the past. Ever since it was withdrawn, there has been a sharp decline in export growth."

Another demand which was not met in the Budget was that of the declaration of tax benefit under 80-HHC for the next five years. Says Malhotra, "One year is too short a time to realise benefits from the scheme. A minimum of three years is required for bringing stability." Agarwal argues that when this incentive had been given to certain other sectors, including power, why were exporters not given the privilege to enter into long-term contracts with buyers on the basis of a long term tax benefit. The exporters had also asked for the Market Development Assistance Funds to be doubled and to be spread among the small, medium and cottage sectors alike. The fund, which is essential for exporters to scout for and develop markets in various countries, is atpresent being given only to a few big mew markets.

Anil Bhardwaj, secretary general, Federation of Indian Micro and Small & Medium Enterprises, feels that the Budget has been "anti-manufacturing and trading-oriented." Short on vision, the Budget has had a negative impact on the export community. The exporters are going through "a lean phase" and were looking forward to "sops and support" from the government.

"Instead, what we got was an immature Budget. The impact of the changes doesn't seem to have been studied by the FM," says Bhardwaj. Export-oriented sectors such as engineering, pharmaceutical, agro-products would be most affected, feels Bhardwaj. "The cumulative impact of loss of DEPV benefits, duty drawbacks and countervailing duty will make exports more expensive." The Budget has also ignored the textile industry, one of the biggest foreign exchange earners for the economy, which needs a heavy dose of modernisation and upgradation. "Unless the government makes funds available for modernisation ofthe industry at LIBOR plus normal rates of interest, the textile industry won't be able to modernise and face global challenges," A Sakthivel, chairman, Apparel Export Promotion Council, pointed out in a letter to the FM.

The government's strategy of focusing on few products for an export thrust, such as leather, software industry and jute, is too precarious and may well back-fire, feel experts. Puts in an exporter: "What galls the community most is that despite all the talk of looking-global-and-acting-local, the government is looking inwards. This will spell doom for the domestic industry in the long run."