Exporters’ Budget Wishlist: Tax Incentives, Duty Corrections, and More
Exporters are eagerly anticipating the upcoming Budget, advocating for several essential measures to enhance their competitiveness. The wish list includes crucial tax incentives and modifications to the inverted duty structure affecting various sectors.
Key Requests from Exporters
– Apparel Exporters:
– Demand fiscal incentives, such as import scrips.
– Request an increase in the interest subsidy rate for loans to mitigate the impact of U.S. tariff policies.
– Engineering Exporters:
– Seek a reduction in income tax for non-corporate manufacturing MSMEs from 33% to 25%.
– Leather Exporters:
– Call for the reinstatement of basic customs duty exemptions on specific leather products.
Pankaj Chadha, Chairman of EEPC India, emphasizes the need for tax reforms: We propose reducing the income tax rate for manufacturing MSMEs operating as partnerships, LLPs, or sole proprietorships to 25%, aligning them with private limited companies. Additionally, we suggest releasing 90% of the GST refunds immediately, with the remaining 10% after verification.
Addressing the Inverted Duty Structure
The Federation of Indian Export Organisations (FIEO) has brought attention to the disparities in the inverted duty structure, particularly affecting:
– Synthetic Yarns and Fibres:
– Currently face higher customs duties compared to finished fabrics and garments, disrupting the textile and apparel value chain.
– Electronic Components:
– Printed circuit boards, connectors, and sub-assemblies incur higher duties than imported finished electronic products, discouraging local value addition.
– Chemicals and Plastics:
– Basic raw chemicals and polymers face higher duties than downstream finished products, which hampers domestic manufacturing.
FIEO President SC Ralhan asserts that correcting these anomalies will lower production costs, alleviate working capital pressures, and enhance India’s export competitiveness. Furthermore, he proposes extending the 15% concessional corporate tax rate for new domestic manufacturing units for at least another five years.
Sector-Specific Recommendations
– Textiles:
– AEPC Chairman A Sakthivel recommends reducing GST rates on textile machinery and introducing a technology upgrade scheme for micro units.
– Leather:
– The Council for Leather Exports requests the reinstatement of customs duty exemptions on imports of bovine crust and finished leathers.
Conclusion
As exporters prepare for the forthcoming Budget, their wishlist highlights the urgency for impactful tax incentives and corrections to the inverted duty structure. These measures are crucial for fostering a robust export environment and ensuring Indian manufacturers remain competitive on a global scale. The outcome of these requests could significantly shape the landscape for export-oriented industries in India.