Effects of Union Budget on Indian Export Business

According to the reforms mentioned in the Union budget of 2010, the export sector of the country is likely to expect a surge in various fields. The year 2009 witnessed a sharp decline in the agricultural production due to the delay in monsoons. The decline in food production has led to the subsequent rise in the food prices. Prices of rice, oil and grains soared in the year 2009-10.

Impact on Export Sector

However, the finance minister has propagated various reforms for the benefit of the export sectors in the country. Many of the SME sectors, handicrafts, carpets and handloom sectors have been offered funds with 2 percent interest. The government has also announced certain reforms on taxes on specific export products.

The handicraft sector has benefited little from the reforms announced in the Union budget of 2010. The handicraft exporters are still not exempted from taxes which are major issues concerning the exporters. The labour intensive sectors such as the handicraft sector have had an unfavourable impact due to the reforms put forth during the Union budget.

Most of the export sectors which include the leather factories, jewelleries, marine, textiles and so forth have achieved little with the concessions allotted in the budget proposals. According to the recent budget proposals, the indian exporters could pay the service tax to the transporters after claiming the refunds instead of paying it first.

The excise duty on cotton and synthetic fibres has been increased by 4 percent which benefit some of the cotton industries. However, the excise duty on synthetic fibres will increase the end prices of the goods. The price rates of the raw materials are considerably high and as a result the prices of the export goods are also higher which increases the burden on the export sector.

While some of the measure and policies announced in the Union budget do bring in some relief to certain export sectors of the country, there are many sectors which have benefited little from the reforms and policies. There are still many SME sectors which need proper assistance in the form of structural adjustments which needs to be attended to by the government.