"These incentives have been given by the Government to offset certain major handicaps of exporters like high freight costs; to make Indian products competitive in global markets, etc. Thus, if these are taxed then the whole purpose of providing these incentives are defeated; only 66% of the benefit accrues to the exporter", the EEPC India pre-budget memorandum stated.
It also said that certain key segments of engineering exports continue to suffer from the inverted import duty , creating disincentives for value-addition. For instance, inverted/uniform custom duty structure on HRC [10/12.5%] and value added CR products (12.5%) lead to import of downstream cold rolled products and manufactured products dampening the downstream industries. "Accordingly, the Custom duty on HR coils be reduced by minimum 5% and be revised to 5/7.5%’’.
Likewise, the apex organization of the engineering exporters said, for improving the value chain of exports, research and development should be given fiscal incentives. "R & D is the backbone for sustained growth of any Industry. This will help to develop new products, and compete with other international players. Currently, any import for R&D is subject to payment 5% duty with lot a paper work and approvals. This actually hampers the R&D of any organization. It is suggested that import duty for R&D purpose should be zero, so that more and more investment can take place in this sector’’ .
The EEPC India chairman Mr Ravi Sehgal said, Indian engineering exports are already going through tough time because of high input cost, issues with GST, lack of finance for MSMEs and sluggish global economies. Engineering exports have been faltering in recent months.
According to an analysis of the council, the sudden withdrawal of GSP by USA which is already effective from June 5 will be detrimental for Indian exporting community. Withdrawal of GSP will definitely have adverse impact on the products (833 engineering products out of 1900 total products) exported from India under GSP programme which are mostly manufactured by Indian MSMEs .The government should provide some fiscal support for affected products especially for the labour intensive MSME sector.
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