The Federation of Indian Export Organisations (FIEO) wants specific intervention of the Indian government in the upcoming budget for 2017-18 to spur exports, ranging from interest subvention to exemption from indirect taxes under the proposed Goods and Services Tax (GST).
Here is the complete wish-list submitted by the FIEO:
- The Credit Linked Capital Subsidy Scheme (CLCSS) has helped the small scale sector to modernise and expand their production. The CLCSS limit was fixed at Rs 1 crore about a decade back, and therefore, the limit under CLCSS may be enhanced from Rs 1 Crore to Rs 5 crore.
- Countries are supporting aggressive marketing to get limited orders available globally with slowdown in global trade. Government should create an Export Development Fund for aggressive marketing particularly for MSME by providing a corpus of about 0.5 percent of previous year exports, as the present support through marketing scheme is inadequate.
- The merchant exporters contribute to over 40 percent of country's exports. These exporters are presently exempted from VAT /CST, while taking goods for exports. However, such exporters will be subject to IGST, which will block their capital and thus reduce their competitiveness. Government should allow exemption from IGST to merchant exporters against a running bond, which may be debited while taking supply, and credited when proof of exports is provided. Since GSTN and ICEGATE will be linked, this can be easily implemented.
- Government of India has extended 3 percent Interest Equalisation Scheme to MSME manufacturing units and certain labour intensive sectors. However, merchant exporters, though covered in the definition of MSME, have been excluded in the scheme. Merchant Exporters may also be given Interest Equalisation benefits.
- Government needs to be complimented for undertaking the most radical reform with far reaching results in the history of independent India through demonetisation. This will change the shape of Indian economy, Indian politics and even the Indian society. The demonetisation will hugely benefit the GST regime which requires that all transactions are properly accounted for. However, like any big reform or change, it has its teething problem.
- Payment of wages to workers is a challenge. Many of them coming from distant areas may not have bank account at their place of works Those taking small quantities like fruits, vegetables from farmers or handicraft from artisans or sending goods for job work are also reporting the same problem. The transportation of raw material and finished goods has also been delayed. The withdrawal limit may be increased to 1 percent per month of previous year turnover from Rs 50,000 per week. The said limit can easily be operated by the banks as they have access to the balance sheet and turnover details of each firm/company.
- In view of the recent development on the GST front, the Budget should align indirect tax rates (other than custom duties) towards the standard rate of 12 percent and 18 percent Service tax and Excise duties may move in this direction for smooth transition to the GST.