Exporters and industry organisations will present their fresh wish-lists to the government on Wednesday at a meeting to be attended by Planning Commission Deputy Chairman Montek Singh Ahluwalia and other top government officials.
The demands include specific sops for some labour-intensive sectors and steps to reduce procedural delays in export-related reimbursements.
Trade and Commerce Minister Kamal Nath today said the government would consider a relief package for exporters after the meeting, which will be attended by Cabinet Secretary KM Chandrasekhar, Commerce Secretary Gopal K Pillai, Revenue Secretary PV Bhide and Finance Secretary Arun Ramanathan. Industry and exporters will be represented by the Federation of Indian Export Organisations (FIEO), the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Confederation of Indian Industry (CII).
The government has announced two fiscal packages since December 2008, which include relief measures for exporters too.
“There is need for some sectoral focus on issues related to labour-intensive areas like textiles, gems and jewellery, and leather, among others,” said a Ficci representative who will attend the meeting. India’s export growth dipped in October and November 2008 as demand from key markets like the US and the EU fell sharply due to the ongoing economic downturn.
One of the major demands of exporters is likely to be the refund of state taxes. “In many states, these constitute 5-6 per cent of the value of the export consignment. This erodes the competitiveness of Indian exports in the international market. Exporters want that in this hour of crisis, the state taxes should be refunded through a special scheme,” said a FIEO representative.
Exporters will also seek access to dollar-denominated export credit, which has dried up. The wish-list is likely to include increased subsidy on export credit as well. The CII argues that India’s competing countries from South-East Asia get export credit at less than 5 per cent, and has called for removal of the minimum limit of 7 per cent on interest rates for export-related loans.
The CII has also called for reinstating the income tax benefit available to exporters under Section 80 HHC of the Income Tax Act, which was taken back in 2004-05. Under this, Indian exporters got tax benefits if they ploughed back profits to plant and machinery.
Many problems related to the refund of indirect taxes to exporters are also likely to be taken up. “Central excise refunds to exporters take up to three months. Exporters are not getting service tax refunds because of technical issues. Even duty drawback payments (under a duty remission scheme) are held up since November in the inland container depot in Tughlakabad near Delhi,” said a FIEO functionary.
Exporters want the government to refund 80 per cent of the dues immediately and say that the rest would be paid back after the completion of procedural requirements.
Certain sectors are also looking at specific issues. Textile exporters want duty drawback (a duty remission scheme) rates to be increased. Another issue bothering exporters from the sector is the recent increase in the Minimum Support Price (MSP) for cotton. Textile exporters say the new MSP makes Indian cotton costlier than international cotton by about 15 per cent. Exporters have demanded that the government procure cotton and sell it to them at international rates.
Source : Business Standard