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Exporters seek refund of state levies, creation of export fund |
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Ahead of the pre-budget meeting with finance minister, P Chidambaram, on Wednesday, exporters sought refund of certain state levies and setting up of an export development bank to make Indian exports competitive, ensure availability of easy and cheap credit to exporters.
“Exports are burdened with the incidence of state and local levies. These levies are making our exports more uncompetitive. Therefore, taxes like VAT, sales tax on petroleum products and octroi should be refunded,” Rafeeque Ahmed, president of the Federation of Indian Export Organisation said, adding that the move would provide two-three per cent benefit to exporters, particularly to those dealing in commodities.
Prior to this, last week exporters had sought government’s intervention in curbing the inverted duty structure, especially from the free trade partners like Japan, Malaysia and Korea on products like chemicals and copper, as it is impacting domestic industry.
Even commerce ministry has stood by the exporters demand of doing away with the inverted duty structure and has taken up the issue with finance ministry.
Inverted duty structure impacts the domestic industry adversely as a manufacturer has to pay a higher price for raw material in terms of duty, while the finished product lands at lower duty and costs low. Companies manufacturing tyres, electrical equipment and medical instruments are suffering the most due to this.
Textile exports, which have been hit by the 2012 crisis, are now seeking fixed interest rate at 7.5 per cent for all loans to overcome the issue of availability of cheap loans.
“The separate chapter for export sector is a very important, as it will help us to get credit at low interest rate and till the government does that, it should ensure that the bank credit rate given to exporters may be fixed at 7.5 per cent as the interest rates prevailing in our competing countries are lower than our banks rates,” A Sakthivel, chairman of Apparel Export Promotion Council said.
According to Sakthivel, the government should also provide five per cent incentive under market linked focus product scheme for the exports made to non-traditional markets as exports to these markets have been growing vis-à-vis traditional markets and it needs the adequate support at right time.
Merchandise trade deficit has expanded five fold in less than a decade from 2.3 per cent of GDP in 2004 to 10 per cent of GDP in 2012 and earnings from export are increasingly insufficient to cover import requirements.
The situation has worsened in 2012 due to slowdown in demand from India’s traditional markets, the US and Europe, resulting in contraction in exports since May last year. Both the US and Europe accounts for one-third of India’s exports which stood at $303 billion in 2011-12.
During the April-December period of 2012-13 fiscal, India’s overseas shipments have shrunk by 5.5 per cent to $214.1 billion.
Source : mydigitalfc.com
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