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Exporters’ Budget Wishlist: Tax Sops, Duty Corrections, and More
New Delhi: Exporters recently expressed their urgent needs for the upcoming Budget, calling for a range of measures, particularly tax sops and rationalization of import duties to boost competitiveness.
Key Proposals from Export Sectors
– Apparel Exporters:
– Requesting fiscal incentives, including scrips.
– Seeking an increase in the interest subsidy rate for loans to mitigate the impact of US tariff shocks.
– Engineering Exporters:
– Proposing a reduction in the income tax rate for non-corporate manufacturing MSMEs from 33% to 25%.
– Leather Exporters:
– Requesting reinstatement of the basic customs duty exemption on certain leathers.
According to Pankaj Chadha, chairman of EEPC India:
– We propose reducing the income tax rate to 25% for manufacturing MSMEs operating as partnerships, LLPs, or sole proprietorships to align them with private limited companies.
– Additionally, a call has been made to release 90% of GST refunds immediately, with the remaining 10% contingent upon verification.
Addressing the Inverted Duty Structure
The Federation of Indian Export Organisations (FIEO) highlighted the need to rectify the inverted duty structure affecting several sectors, including:
– Synthetic Yarns and Fibres:
– Current customs duties on synthetic yarns and fibres are higher than those imposed on finished fabrics and garments, negatively impacting the textile and apparel value chain.
– Electronic Components:
– Higher duties on components like printed circuit boards and connectors compared to finished electronic products deter domestic value addition.
– Chemicals and Plastics:
– Basic raw chemicals and polymers face elevated duties compared to downstream finished products, undermining local manufacturing.
FIEO President SC Ralhan stated:
– Correcting these anomalies by lowering duties on raw materials will reduce production costs, ease working capital pressures, and bolster India’s export competitiveness.
– He also advocated extending the 15% concessional corporate tax rate for new domestic manufacturing units for an additional five years.
Additional Sector-Specific Requests
– Textiles:
– AEPC Chairman A Sakthivel has proposed reducing GST rates on textile machinery and introducing a technology upgradation scheme for micro units.
– Leather:
– The Council for Leather Exports seeks to reinstate the basic customs duty exemption on importing bovine crust (semi-finished leather from cattle hides) and other finished leather products.
In conclusion, exporters’ wishlist for the upcoming Budget encapsulates critical requests aimed at enhancing the sector’s resilience and competitiveness through tax sops and corrections to the duty structure. Addressing these concerns can significantly aid in strengthening India’s export capabilities and overall economic growth.