Officiating finance minister Pranab Mukherjee's Interim Budget for 2009-10 has provided for a six-month extension of the interest subsidy scheme, for exporters' loans taken in the labor-intensive sectors.

The announced extension of the 2 percent interest subsidy scheme - for small and medium enterprises as well as long-established export areas, like leather, textiles, marine products, gems and jewellery - will be costing the exchequer nearly Rs 500 crore in 2009-10.

The Indian exporters were seeking an extension of the scheme - which was to expire on March 31 this year - till December 2009, along with a wide array of tax and non-tax sops, like exemption from fringe benefit tax, income tax exemption on export profits, and investment allowance. Expressing disappointment at the government's announcement, A Sakthivel, President of FIEO - Federation of Indian Export Organizations - said that exporters were "expecting certain more tax-related measures today, but none of our other demands has been fulfilled."

However, the commerce secretary, GK Pillai, has informed The Indian Express that some "procedural changes" - like giving a demonstrative outcome to the service tax refund scheme - would follow in future.

Saying that it was not possible to incorporate all the demands of the exporters, Pillai said that the government's endeavor has always been in the direction of sustaining "a fair balance between fiscal concessions and the fiscal deficit."