A day after states agreed to implement the value-added tax (VAT) system from April next year, the Export Promotion Council (EPCH)of said VAT would hit small exporters adversely and sought special provision for exporters to maintain their global competitiveness.

“VAT will hurt small exporters as they would have to deposit taxes in advance. Under WTO rules a country can refund exporters’ indirect taxes like VAT they have paid on goods. But there would be a time lag between the payment and refund which small exporters cannot afford,” executive director of EPCH, Rakesh Kumar said.

Kumar said most of the handicrafts are manufactured by small artisans who would be adversely affected by the new system.

Highlighting the increasing contribution of handicrafts in the country’s forex earnings, Kumar said handicraft exports surged by 25 per cent to Rs 104.65 billion (US$2.29 billion) in 2003-04 from Rs 83.43 billion a year ago.

“We have set a target of Rs 327 billion by 2009-10,” he said, adding that the government should give special provisions within VAT if this target is to be achieved.

Kumar said the Council would meet Federal Commerce Minister Kamal Nath on June 22 to put forth its demands.

India’s share in the US$106 billion handicrafts market is two percent compared to China’s 16 per cent, he said, adding there is a need for skilled professionals in the area of merchandising to make Indian exports globally competitive. (Asia Pulse Pte, Ltd.)