Exporters are seeking cuts in income tax to sustain themselves. They want relief from income tax and service tax and make exports credit cheap in the impending budget. This is to put a stop to the declining exports.

Exports have been declining for the past seven months. Exports fell 33.2% in April, because of a reduction in demand due to economic downturn. The trade secretary said the exports will continue to fall until September. Recovery may start after September. Exporters are seeking exemption from income tax on export profits for five years and a subsidy in interest on bank loans until March 31, 2012. They also want exports credit to be cheaper at 7%.

Sakthivel, President of the Federation of Indian Export Organisations (FIEO), after having a meeting with the Finance Minister Pranab Mukherjee, said $200 billion can be achieved in exports in the coming year after the requests are met.

Exports were at $168.7 billion in 2008-09. This may remain flat for this year till March 2010. But, Sakthivel said the exports can grow up to 15% with good support from the government. Nearly one-fifth of India’s GDP comes from exports and its decline has jolted overall growth in economy.

Sakthivel added the contraction has rendered many people jobless and there could be more job losses because of negative growth rate. The government was contemplating more relief measures for export-oriented sectors like leather, textiles, and jewellery.

If the economic situation in US and Europe worsens, India’s exports will decline further. The World Bank has predicted global trade to contract 6.1% this year, while World Trade Organisation has predicted a compression of 9%.