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With exports falling continuously for the past 14 months, the Federation of Indian Export Organisations (FIEO) has called for fiscal incentives for the micro, small & medium enterprises (MSME) sector, correction of inverted duty structure and exemption from service tax, in its Budget proposal for 2016-17 submitted to the government.
“MSME exporters need to be provided additional export benefits to help them market their products aggressively in view of current downfall in exports,” FIEO said in its recommendation.
It also said that the inverted duty structure in respect of various items needs to be corrected in the Union Budget as it not only affects exports but also the manufacturing sector and the Centre’s `Make in India’ initiative.
Inverted duties (where the import duty on inputs is more than that on finished products) exist in a number of sectors in the country such as marine products, chemicals, solar equipment, rubber and silk.
In its memorandum, FIEO has made a case for exemption of service tax for exporters as the actual refund mechanism for service tax is “cumbersome and time-consuming and blocks the working capital of exporters''.
The services for which it specifically asked for exemption include ECGC premium, CFS services, CHA charges, banking charges on collection of bill and foreign currency related to exports, service charges for conversion of inward remittances and courier charges for exports documents and commercial shipments.
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