New Delhi, May 22 (UNI) Hit by the appreciating rupee, Garments Exporters Association (GEA) today urged the finance ministry to take immediate action on the recommendations made in the annual supplement to the Foreign Trade Policy with regard to exemption of exports from service tax.
They said neither the annual supplement to the FTP'07 nor the recent RBI Credit Policy provided any export promotion strategy to reverse the downturn in garment exports due to the hardening rupee.
The GEA felt that readjustment of the rupee is imperative to protect the long-term interest of the exporters and added that the RBI should intervene immediately in the currency market to curb undesirable movements in the interest of maintaining the export momentum.
It also accused the Government of inadequate commercial and fiscal relief to meet the new challenges of increasing international competition with recent sharp appreciation in the value of rupee.
Withdrawal of various tax exemptions by the Ministry of Finance has adversely affected the export performance and consequently reduced the profit margin and competitiveness of Indian garment exporters in international market.
''The government should, therefore, take steps to reduce the transaction cost to improve the competitiveness of Indian garment industry,'' the GEA said in a statement.
The current volatility in the foreign exchange market and fluctuations in exchange rates will continue to adversely affect the export community and further erode its profitability.