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Rebates & incentives needed to compete in world market: FIEO

26
Aug '09
Federation of Indian Export Organisations (FIEO), the apex trade body of the exporters have submitted its wish list to the Ministry of Commerce for inclusion in upcoming foreign Trade Policy to be announced on 27th August. Mr. A Sakthivel, President, FIEO said the in the present circumstances, when world trade in reeling under pressure and demand is low, only competitive pricing can be the solution. Direct and indirect taxes considerably add to the cost of the export products in India. A reduction in the taxes will help exporters to do their pricing competitively.

Scheme to rebate State taxes: GST is likely to be introduced as dual GST one for Central taxes and other for State taxes. The merging of two into a comprehensive national GST will take a long time. Exports are already burdened with the incidence of State and local levies which for certain products in certain States may be as high as 5 - 6% of the FOB value. Foreign Trade Policy should therefore, announce a new scheme to rebate State and local levies on an average basis.

Enhancement of incentives under various promotional schemes given Chapter 3 of the Policy: The Foreign Trade Policy provides incentives through FPS, FMS, Market Linked Product Scheme and VKGUY where benefit ranges between 1.25% to 5%. Due to very low benefit under few schemes, exporters are reluctant to avail it. The export benefit under all these schemes should be a minimum of 3.75% and all such schemes may be extended till 31st March, 2012.

Duty free fuel for exports under DEPB/drawback schemes: While Foreign Trade Policy provides for duty free fuel for units having captive power plants and operating under Advance Authorisation. However, the same benefit is not available to such units while exporting through drawback and DEPB schemes. Fuel cost is one of the important components and therefore, the same should be allowed at near the international price to all exporting units either having captive power plants or using generators for export production.

Maintenance of average export obligation: Indian exports were showing a growth of over 20% since 2002-03. However, due to negative growth in world trade, it would be difficult for Indian exporters to maintain such high growth rate so as to adhere to both average and additional export obligation under EPCG scheme. The average export obligation may, therefore, be fixed at 50% of the preceding three years exports particularly for sectors showing negative growth and services sectors such as Hotel and Tourism which are hard hit after 26/11.

Federation of Indian Export Organisations


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