FIEO for refund of state levies, creation of exporter fund

Apex exporters body FIEO asked government to announce measures in the Budget like refund of certain state levies, creation of an export development fund and credit availability at affordable rates to boost country's shipments. In its pre-budget proposals to the government, Federation of Indian Export Organisations (FIEO) President Rafeeque Ahmed said urgent support is required to provide a cushion to exporters reeling under the impact of global slowdown.

"Exports are burdened with the incidence of state and local levies. These levies are making our exports more uncompetitive. Therefore, taxes like VAT, sales tax on petroleum products and octroi should be refunded," he said in a statement. He added that the move would provide 2-3 per cent benefit to exporters particularly to those dealing in commodities. He also asked for abolition of central sales tax, besides waiver of service tax for remittance to overseas offices of Indian exporters in connection with product registration as in the case of pharma sector.

Ahmed also demanded for early introduction of Goods and Service Tax (GST). "It is an urgent requirement of export Industry to effectively compete in the international market. FIEO strongly recommends that all taxes including VAT/sales tax, electricity duty and tax on diesel and petroleum should be integrated into GST," he added.

Further, he suggested creation of an Export Development Fund for aggressive marketing of products. "Alternatively, access to ECB (External Commercial Borrowing) window be provided for MSME (Micro, Small and Medium Enterprises) export sector with waiver of withholding tax," he added. The FIEO president said these measures will help in bridging the widening trade deficit.

"The trade gap has expanded five fold in less than a decade from 2.3 per cent  of GDP in 2004 to 10 per cent of GDP in 2012 and earnings from export are increasingly insufficient to cover import requirements," he said. Due to the demand slowdown and economic uncertainties in the India's traditional markets, the US and Europe, exports are in negative territory contracting since May last year.

Both the US and Europe accounts for one-third of India's exports which stood at USD 307 billion in 2011-12. During the April-December period of 2012-13 fiscal, the country's overseas shipments have shrunk by 5.5 per cent to USD 214.1 billion.