The Associated Chambers of Commerce and Industry of India has suggested a multi pronged strategy for accelerating India’s export competitiveness by way of bringing in exports to subsidy net as also called that exports shouldn’t be subjected to MAT. In addition, the Chamber has demanded allocation of incentives for creation of separate births on major ports and substantial reduction in existing freight trade.
Mr Sajjan Jindal in the wake of forthcoming Foreign Trade Policy, has emphasized the need for exports subsidization on lines of economies of scale including that of China to create adequate space for Indian products in overseas markets particularly those of Africa, Latin America, Nepal, Sri Lanka, Bhutan, Burma, Bangladesh and Pakistan.
Mr Jindal said that export subsidies need to be extended to Indian exporters by substantially reducing excise and local levies and other export duties including import duties on inputs required to make finished products for exports.
This measure is called for present times in which export competitiveness is urgently required since China does it and other economies of scale also do it.
According to ASSOCHAM, India will be able to create a space for its products in overseas markets and earn for it a reasonably substantial foreign exchange since theirs is a huge difference between imports and exports of India as it needs foreign exchange to correct trade imbalances in India’s exports and imports.
Mr Jindal said that secondly, imposition of Minimum Alternate Tax or export proceeds should be avoided as the government refunds it to concern exporters and virtually make no money on it. Export proceeds shouldn’t be subjected to MAT as it amounts to various bureaucratic and hassles and encourages unnecessary government intervention and interference in a smooth flow of exports.
The Commerce & Industry Minister also needs to incentives creation of separate births for export consignments in major and key ports as export consignments are held up for days together unattended at ports and lay scattered for want of space. This is because majority of India’s ports are over congested and no capacity expansion is taking place in many of them. Therefore, capacity expansion drive of ports and airports should be done at accelerated pace for which incentives and fiscal support needs to b extended by government and financial institutions so that separate births are create in ports to preserve and then move export consignments to their required destinations.
Export logistics are again other problematic areas, which are totally inadequate and many times established international standards in India and these need to be set right. Freight rates are too high for export as there are different slabs for different products. The freight rate slab needs to be rationalized to meet the requirement of current times since the government has already done a rationalization on taxation front but freight rates continue to be cumbersome and adversely affect India’s export competitiveness. Lastly, the ASSOCHAM has also called for increase in duty drawback so that exports are duly incentives.
In addition, the Chamber has sought RBI’s intervention so that commercial banks and other financial institutions extend necessary export credit to exports at cheaper interest rates as the ASSOCHAM still feel that financing exports need to be facilitated a little more since exports often complaint of liquidity squeeze as far as export financing is concerned.
Source : Steelguru