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Indian exports bounced back in 2017 after the southward trend in 2016.
With global trade showing encouraging signs in 2018, we all are set to reach new milestones, provided we impart competitiveness to exports amidst increasing volatility, protectionism and liquidity constraints.
The Budget should provide short- and medium-term support to exports to attain double-digit GDP growth. With the indirect taxes virtually outside the ambit of the Budget with the rolling out of GST, the expectations from the Budget are comparatively subdued.
Govt must keep its promise However, the Budget should reiterate the government’s commitment to exports not through rhetoric, but with tangibles.
Marketing support We are not optimistic that an Export Development Fund with sizable corpus for exports marketing will be created, but there should be support to marketing through Income Tax deductions. To give a push to SEZs, either MAT should be abolished, or the rate be brought down to 10 per cent. Corporate Tax should be reduced, as announced earlier, as many US-based companies are exploring ways to close their Indian subsidiaries.
On the customs front, the instances of inverted duty structure need to be looked into. More importantly, the end use exemption for the domestic industry on inputs required for manufacturing products imported through FTAs route should be given, with a push to domestic manufacturing and imports substitution .
The Budget should provide fiscal support to units that create additional employment in the export sector. Incentives may be provided based on twin criteria of growth in exports and employment – while on the one hand when exports increase, on the other, employment-intensive units also get a boost.
There should be a focus on logistics, with substantial allocation for shipping and road infrastructure to build on gains to the sector from GST and e-way bill.
Refunds Many exporters would like to get refunds for exports in one place. The announcement of a comprehensive Drawback Scheme, which covers the incidence of both customs duty and Input Tax Credit, would serve their interest best.
This will provide a huge relief to MSMEs who take supply from unregistered suppliers and find it cumbersome to keep a detailed record required for GST refunds.
The writer is the CEO and Director General of FIEO
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