In its pre-budget memorandum, the council sought 50 per cent tax exemption on profit from export earnings with an additional 50 per cent deduction, provided such amount be transferred to special reserve account to be used for business development.

This tax exemption is sought up to financial year 2009-10, AEPC said. On the indirect tax front, the council has suggested rationalisation of the duty drawback regime and including refund of service tax and indirect taxes paid during the course of production of goods for export under it.

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AEPC, which submitted the pre-budget memorandum to the Union Finance Minister P Chidambaram has also suggested reduction of excise duty on all fibres (excepting cotton, which attracts no duty) and yarns to 8 per cent and withdrawal of countervailing duties on garment manufacturing machines.

The council has also recommended reduction in import duties on speciality fibre, yarn and fabric to zero.

It also sought increase in duty free import of embellishments to five per cent of FOB value and inclusion of even domestic purchase made by exporters under the scheme.

Supporting labour reforms, AEPC's pre-budget memorandum has suggested formulation of clear exit policy or exit route enabling loss making garment units to shut their respective units without going into the cumbersome closure process.