The financial year 2006-2007 will be significant for the exporters as the government is planning to withdraw cash subsidy incentive offered to some export oriented products like textile and leather.
Government official explained that provision for providing direct cash subsidy to exports contradicts the existing WTO rules.
These incentives will be made up through other forms of compensations such as freight charges, utility services, transportation, packaging facilities and customs duties.
However, major traders are demanding that the cash incentives should be continued for atleast several more years so that the industry players are able to establish themselves against the global competition.
According to them, the country's export growth would be adveresely affected if the existing cash subsidy is discontinued.
Justifying this decision, a government official opined that this cash subsidy has been misused and abused.
This act is also likely to affect its mid-term export policy for the fiscal years between 2006-07 and 2008-2009.
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