The mid-year review of 2007-08, a document that reviews the outcome of budget, said that concessions were aimed at providing relief to exporters, particularly those who have been affected more by the rupee appreciation — adjusting to which may not be possible in the short-run.

Face competition

“However, medium and long term solutions lie in improving productivity in exports for India to be more competitive vis-a-vis its competitors,” said the document, tabled in Parliament.

The Indian currency has appreciated by 9.7 per cent against the US dollar, the main invoicing currency for trade, between April 3 and November 20, this year. It has risen 15.1 per cent in the 12 months from October 2006.

The document, however, said that there was no one-to-one relationship between (rupee) appreciation and exports. “Relative appreciation of currencies of major competitors; the import intensity of the major export sectors; combination of exchange rate and inflation reflected in real effective exchange rates; and slowdown in growth of world economy/world trade affect exports,” the review said.

“The effect of appreciation, however, also needs to be seen from a broader perspective, as it also makes imports cheaper but at the same time could lead to temporary job losses in the export sectors by moderating their growth.

The Centre has announced a package worth over Rs 5,000 crore to help exporters, including by granting exemptions from payment of service tax on a few services.