New Delhi, Feb. 11 With shipments in the positive territory for the third consecutive month in January reflecting a partial recovery after 13 months of contraction due to the global crisis, the Government is mulling withdrawal of stimulus measures for certain export sectors that have shown a robust growth.
Taking this new development into account, the Federation of Indian Export Organisations (FIEO) — the apex body for exporters — on Thursday gave a revised Budget wish-list to the Government, the FIEO Director-General, Mr Ajay Sahai, told Business Line.
Turnover tax
In its demands, FIEO has said a turnover tax should be levied on exports in place of income-tax. The turnover tax will simplify tax procedure and reduce the administrative burden on exporters. This tax can be collected at 0.25 per cent on all remittances received from abroad thus plugging any leakage and reducing cost of collection, FIEO has said.
It has also sought investment-linked incentives for micro, small and medium enterprises in the export sector. To increase investment in manufacturing, MSME export sectors should be given tax concession on investment in capital and machinery, FIEO said. It has also demanded an extension of tax holiday by another three years for Export-Oriented Units and units in Software Technology Parks.
There must be exemption from service tax on all output services for exports, it said. Besides, service tax exemption must be given to FIEO and all export promotion councils.
Pointing out that exporters need to replace old machineries with machineries that have the latest technologies to increase their output and reduce cost of production, FIEO said the rate of depreciation on the old machinery should be increased from 15 per cent to 25 per cent to encourage exporters to purchase new machinery.
Bank credit
Referring to the availability of bank credit at below 5 per cent in South East Asian countries for their exporters, who are Indian exporters' competitors, FIEO said the Government should ensure that exporters get credit at a flat rate of six per cent.
It has sought extension of interest subsidy scheme till March 31, 2013, in case the Government finds that providing export credit at 6 per cent is not feasible.
Exporters have also demanded that they need to get foreign currency credit at the earlier rate of LIBOR plus 100 basis points. Following the financial crisis, this rate was increased to LIBOR plus 350 basis points.
Their other demands are rectification of inverted duties structure in silk and synthetic fibre, besides notification for cash rebate of accumulated CENVAT credit on account of reduction in excise duty.
Source : Business Line