NEW DELHI - With the exports dipping for the second consecutive month in May, the allocation for the market development scheme for exporters has been increased 148 percent to Rs.124 crore, Finance Minister Pranab Mukherjee said while presenting the union budget for 2009-10 in the Lok Sabha Monday.

The market development scheme provides support to exporters in developing new markets. The US and European markets constitute 60 percent of the total exports but are still under financial stress, which has necessitated identifying and developing new markets.

“I propose to enhance the allocation for this scheme by 148 percent over BE (budget estimate) 2008-09 to Rs.124 crore, Mukherjee said.

The Export Credit and Guarantee Corp (ECGC) scheme, initiated last year to help the badly hit sectors with 95 percent cover, has also been extended till March 2010.

Similarly, the interest subvention for the textile industry has been extended from Sep 30, 2009, to March 31, 2010.

The government, with a view to insulate the labour-intensive export sector, last year had provided an interest subvention of 2 percent on pre-shipment credit for seven sectors - textiles including handlooms, handicrafts, carpets, leather, gems and jewellery, marine products, and small and medium exporters.

Giving in to the gems and jewellery industry’s demands, the finance minister exempted basic customs duty on rough corals. Full exemption from basic customs duty is being provided to rough corals for encouraging value-addition and export, he said.

However, no changes in the central excise duty on manmade fibre and yarn were proposed in the budget.

I propose to restore the rate of 8 percent central excise duty on manmade fibre and yarn on a mandatory basis and on stages beyond fibre and yarn at that rate on optional basis, Mukherjee said.

These changes, together with duty changes on intermediates, would imply that the duty on all types of manmade fibre and yarn and their intermediates would be the same, easing the problem of credit accumulation.

Customs duty on wool and cotton waste, used for manufacturing blankets and rugs, has been brought down to 10 percent from 15 percent.

Moving further, Mukherjee exempted the export promotion councils and the Federation of Indian Export Organisation (FIEO) from service tax on the membership and other fees collected by them till March 31, 2010.

The export promotion councils and the Federation of Indian Export Organisations provide a valuable service in augmenting our export effort. I propose to exempt them from the levy of service tax on the membership and other fees collected by them till March 31, 2010, Mukherjee said.

He also assured the exporting community of speedy refund service tax paid on certain taxable services used after the clearance of export goods from the factory.

For some time now, the exporting community has been expressing dissatisfaction over the difficulties faced in obtaining such refunds. Several procedural simplifications attempted in the past have also not yielded satisfactory results, the finance minister said.

The solution seems to lie in placing greater trust on the claims filed by the exporters, he added.