The government is likely to increase excise duty by 2 per cent in sectors like FMCG and automobiles, as well as raise service tax, in the forthcoming Budget to reduce the fiscal deficit, a report said.

SMC Global Securities Ltd, in its forecast for the 2010-11 Budget, said that service tax is expected to be hiked to 12 per cent from the current level of 10 per cent.

In bad news for exporters, it said the Finance Minister is unlikely to extend the interest subsidy of 2 per cent, as the country’s exports are likely to cross the USD 200 billion target for the current fiscal.

In the last Budget, the government had extended the concessional export finance regime till March 31.

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