Union Commerce and Industry Minister Kamal Nath (left) being welcomed by FICCI President Habil Khorakiwala at the 80th annual meeting of FICCI in New Delhi on Saturday. NEW DELHI: With a view to bailing out exporters reeling under the impact of a costlier rupee, the Centre has asked the Finance Commission to figure out and suggest ways in which it could refund State levies to traders and adjust the same against the States' accounts. In fact, the terms of reference have been enlarged to enable the Commission to address itself to this aspect. "I have got it included in the terms of reference of the 12th Finance Commission to work out a mechanism where the State levies are refunded by the Centre to the exporters and then appropriated to States,' Commerce and Industry Minister, Kamal Nath, said at the annual general meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI) here on Saturday. Badly affected by erosion of margins by a sharp rise in rupee value, particularly against the U.S. dollar, exporters have been demanding refund of various levies like octroi, mundi tax and electricity duty on the lines of reimbursement of central taxes. Under the present tax-sharing arrangement of the Centre and the States, the Government finds it difficult to work out a refund mechanism. Further, the Constitution has mandated the Finance Commission to define the tax sharing arrangement between the Centre and the States. Responding to a query as to how exporters' woes can be mitigated in the forthcoming Budget, Mr. Kamal Nath said he favoured a cut in import duties on several items. "There should be reduction in import duties on some items... because we have to ensure that the inverted duty structure in a large number of areas is corrected,' he said. He referred to the fact that under an inverted duty structure, import duty on raw material was more than that on the finished product, leaving no incentive for domestic production. As such, he said, there was all the more need to correct this fallacious duty structure in the wake of India entering into a host of trade agreements under which imports on many items would eventually become duty-free or would attract minimal levies. Trade agreements The Commerce Minister said India was in the process of concluding a trade agreement with the ASEAN and is moving ahead with the EU on another trade and investment agreements. He hoped that these agreements would be in place in the next one year. "The signing of the agreements with all the regional economies will enable India to effectively integrate with the new and emerging global economic architecture. "The agreements will further enable the Indian industry to adapt to the changing global business dynamics. This will definitely adversely impact certain sections of Indian industry in the short-run, but in the longer-run, we will realise the worth of the efforts and measures taken today,' Mr. Kamal Nath said. Noting that India has to occupy its place in the new global economic architecture, he said these trade agreements would help and facilitate the domestic industry to get access to global technology and markets. "If we let other countries take that space, we will not get it,' he said. Level field "The Indian Government has recognised the need for initiating fiscal policy reforms and restructuring the prevailing taxation structure in the country for providing a level-playing field to the Indian industry. At the same time, we are in a process of optimally utilising the forum like WTO to negotiate and for ensuring global rules of trade to be fair and impartial, which has not been the case in the past,' he said. While on the issue of high levels of subsidies given by developed countries, specially the U.S. and the European countries, he said that the "current distortions in the trade dynamics due to such measures was completely unacceptable to developing countries, of whom, India has emerged as a collective voice, which, developed nations can no longer afford to ignore.'