Strategy to boost engineering exports.

New Delhi, Nov. 17: Engineering exporters have urged the finance ministry to provide an efficient refund system in the coming budget to counter the loss of exemptions under the goods and services tax (GST).

In its pre-budget memorandum, EEPC India said credit refunds under impending GST should be made efficient to the extent that an automatic system of tax credits is brought into operation.

A strong performance by engineering goods and gems & jewellery has pushed up exports for the second month in a row in October by 9.59 per cent.

Besides, multiple advance ruling centres at the central and state levels should be set up to ensure certainty.

"What credit can accrue, what cannot accrue, what is exporter's liability and what is due to him can be brought about by the advance ruling centres," P.K. Shah, former chairman of EEPC India, said.

He said all products made of steel should be compensated by higher drawback rates since the protection given to large steel makers against imports had resulted into higher cost of production, particularly for small and medium enterprises.

Exporters said the support provided by the government would be seen in the exports figure in the coming months. However, he said the government should also look into the problem of working capital in the refund process in the proposed GST regime along with infrastructure bottlenecks and a reduction in logistics cost.

"While an increase in exports has been encouraging and is in line with the improvements in global trends, a rise in imports seems more of a temporary festive-related impact as of now and likely to moderate in the coming months," Yes Bank said in a note.

"We continue to remain sanguine on India's external trade scenario, forecasting a current account deficit of 0.5 per cent of GDP in 2016-17, which could see a further downside risk amid demonetisation-led near-term disruption in local demand," it said.

EEPC said in terms of direct taxes, in line with the domestic companies and non-corporate tax payers, engineering exporters should also be allowed a weight deduction to the extent of 11/3 times for expenditures incurred.

Source : telegraphindia.com