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Pre-Budget Meet: Indian exporters demand fiscal support, credit at affordable rates in FY24 Budget.

Date: 25-11-2022
Subject: Pre-Budget Meet: Indian exporters demand fiscal support, credit at affordable rates in FY24 Budget
Exporters on Thursday demanded measures such as creation of a fund and credit at affordable rates in the forthcoming Budget to boost the exports and create jobs.

In a pre-budget meeting with Finance Minister Nirmala Sitharaman, Federation of Indian Export Organisations (FIEO) said depreciation of the rupee against the US dollar is affecting exports' competitiveness and due to that the sector requires more support.

"Creation of employment is the biggest challenge faced by the country....We would urge the government to provide fiscal support to units who provide additional employment in the export sector. Such a scheme will also help workers move from informal employment to formal employment," the federation said.

Incentives may be provided based on twin criteria of growth in exports and growth in workers so that while on the one hand exports are increased, on the other hand, employment intensive units also get a boost, it said adding when global demand is declining, it becomes all the more necessary to go for aggressive marketing.

However, most of the Indian companies are cutting their marketing expenditure in view of the contraction and this may impact the country as if Indian products are not visible in the market, FIEO said.

"The support given under Market Development Assistance (MDA) scheme with total allocation of less than Rs 200 crore, for promoting exports to USD 460-470 billion is just a drop in the ocean.

"Therefore, for aggressive marketing, there is a need for creation of an Export Development Fund with a corpus of minimum 0.5 per cent of preceding year's exports," it suggested.

It also asked for a 200 per cent tax deduction on the expenditure made by exporters for overseas marketing.

On freight, it said Indian exporters remitted USD 82.65 billion as transport service charge in 2021.

"When we are looking at increasing our international trade to USD 2 trillion in an economy of USD 5 trillion, the outgo on transport services will increase to USD 150-200 billion. If an Indian shipping line gets only 25 per cent of such a market, we can save USD 40-50 billion every year," it said.

It asked to encourage the private sector, through tax and fiscal incentives, to come forward to set up a global Indian shipping line to exploit the ready market available to them.

Further, it said the credit rate for most of the MSMEs has already crossed the double-digit mark and is currently between 11-13 per cent.

"We expect the same to go further in the next few months or so. Therefore, there is an urgent need to restore the interest equalization benefit of 5 per cent to manufacturer MSMEs and 3 per cent to all 410 tariff lines (broad sectors) as existed prior to October 2021, as cost of credit has crossed the pre-COVID level and is adversely impacting exporters," the exporters body said.

 It suggested that GST refund to foreign tourists at the airport has not yet been operationalised and such an initiative will not only give fillip to tourism but will also help in exports of handicraft, non-precious jewellery, carpets, textiles, khadi, and leather.

The Council for Leather Exports (CLE) demanded reinstatement of basic customs duty exemption on wet blue crust and finished leather to boost the shipments.

India's exports entered negative territory after a gap of about two years, declining sharply by 16.65 per cent to USD 29.78 billion in October, mainly due to global demand slowdown, even as the trade deficit widened to USD 26.91 billion, according to data released by the commerce ministry.

Key export sectors, including gems and jewellery, engineering, petroleum products, ready-made garments of all textiles, chemicals, pharma, marine products, and leather, recorded negative growth during October.

During April-October 2022, exports recorded a growth of 12.55 per cent to USD 263.35 billion. Imports rose 33.12 per cent to USD 436.81 billion.

The merchandise trade deficit for April-October 2022 was estimated at USD 173.46 billion as against USD 94.16 billion in April-October 2021, as per the data.

Budget for 2023-34 is likely to be presented on February 1 next year.

Source Name:-Economic Times 


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