Export bias

Assocham secretary general DS Rawat writes in Financial Express

Indian exporters, especially small-scale exporters, cannot do without the fiscal incentives provided to them by the government. The small-scale sector we know is a principal contributor to the country’s exports; specifically they still constitute around 40% of India’s total exports. For the continued contribution of these units to exports, they must be provided with production and export incentives, support for adoption of latest technology, advisory services, and market support to sustain their competitiveness in the international market.

One of the most important arguments for not scrapping the corporate tax and excise duty exemptions is that the general exporter is extremely dependent on them. Our internal survey of ten major sectors in September 2006 shows that exporters were highly dependent on promotional schemes and incentives. They still look to the government to provide them support in their export endeavours.

Moreover, compared to other countries, both developing and developed, it has been felt that India offered its exporters relatively less incentives, and if the present exemptions were to be scrapped, it would seriously affect our future trade potential. Assocham is a firm believer in providing such institutional/financial/promotional incentives to boost production and exports and accelerate growth, so that India raises it share in global markets.

A couple of questions. These arguments - why don't they apply to those who supply to domestic market? What about importers?