Welcoming the budget, Pahlaj Nihalani, president of Association of Motion Pictures and Television Programme Producers said: ``The film industry is grateful to Finance Minister Yashwant Sinha for exempting export earnings on feature films. We are also thankful to Shatrughan Sinha without whose efforts in convincing the BJP government, the concession would not have been possible. The film industry will surely live up to the government's expectations by earning more foreign exchange for the country,'' he noted.

Rajendra Singh Hora, former president of Indian Film Exporters Association, said the concession came as a big relief to the film industry and exporters in particular. ``We had been fighting for exemption of Income Tax with the income tax department, which had disallowed the concession since 1995, and we had also madeseveral representations to the Finance Ministry. Last year, export earnings touched a figure of Rs 200 crore. With tax concessions, the export earnings will shoot up by 100 per cent during the fiscal year,'' he pointed out.

The exemption has also been granted to television software and cassette industries. Export earnings under these categories were also to the tune of Rs 100 crore last year, which would automatically be doubled considering the rise in exports of TV serials and music cassettes.

However, exporters are not clear if the exemption is with retrospective effect. Many appeals are pending before the income tax department against refusal of exemption on export earnings under 80 HHC, since the IT did not consider film exports as goods. Since the rights were sold on lease, the exporters were not granted exemption. Prior to 1995, exemptions were granted, which led to unprecedented increase in export earnings from a mere Rs 15 crore to Rs 200 crore. While the income tax commissioner in Chennai hadallowed exemption on export earnings of Tamil films, including films made by Kamal Hasan, his counterpart in Mumbai rejected the claims. Since most of the income comes from Hindi films exported from Mumbai, Hindi film exporters were finding it difficult to bring in more foreign exchange earned on Hindi films.