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The Southern India Mills’ Association

Committed to Foster the Growth of the Textile Industry

Exporters seek decisive fiscal steps to give fillip to exports

The engineering exporters from the northern region hope that the Union Budget will entail decisive fiscal steps to boost the exports that have been hit after the demonetisation and GST.
The engineering exports from the region are dominated by the SMEs. Across the country, 40% of engineering exports come from the MSME sector. The engineering industry comprises hand tools, agriculture equipment, auto parts, casting and forgings, cycle parts and textile equipment etc. The total turnover of engineering exports from the region is around Rs 25,000-Rs 30,000 crore. The industry, which is already grappling with high steel prices, has the following demands:
Faster GST refund
“The exporters need special attention, especially after the implementation of GST. A significant portion of the exporters’ working capital is waiting for refund from the Centre. This is one of the factors which are affecting the competitive edge of exports. So, the government should evolve a mechanism so that the exporters’ refunds can be expedited,” said SC Ralhan, a hand tool exporter from Ludhiana.
Freight subsidy
The exporters have to spend a significant amount on transportation of goods — first to import the raw material and then to export the finished goods. Being a land-locked state, they have to bear huge transportation charges which are being absorbed in the export pricing, leading to losing out business as compared to their competitors. “The Centre should consider providing transport/freight subsidy and enable the exporters from the hinterland to compete with their counterparts in the coastal states and other countries,” said Ashwani Kohli, senior vice-president, Punjab Chamber of Small Exporters.
Curb rising steel prices
Upkar Singh Ahuja, president, Chamber of Industrial and Commercial Undertaking, said the daily increase in the prices of steel is hitting the MSME units manufacturing auto parts, bicycles and its parts, sewing machines, electrical machinery, textile machinery, fasteners, hand tools and other products. Industries are cutting down their production due to uncertainty in steel prices. He said the steel prices have seen an increase of 35% during the past one year.
The chamber is planning to take a delegation to meet Union Finance Minister, Steel Minister and Secretary, Steels, for intervention into the matter. The industry demands that since the export of prime steel doesn’t add additional value, it should be discouraged and banned. The chamber apprehends that this will keep the prices in control.
Impetus to marketing
According to the Federation of Indian Exporters, the government should give impetus to marketing through tax deductions. Many countries have become extremely aggressive to push their exports. “Unfortunately, we have very meagre allocation for Market Access Initiative (MAI) Scheme which supports export marketing,” said a senior official in the FIEO. The FIEO has proposed the creation of an Export Development Fund to the tune of at least 0.5% of total exports to support export marketing. Alternatively, the government may provide 100% tax deduction on the expenditure incurred by the exporters for overseas marketing. Such a move will help showcasing the Indian products overseas.