In pre-Budget meet, FIEO bats for steps to gain $25 bn extra exports from possible US, China trade war

Finance Minister Nirmala Sitharaman

In a pre-Budget consultation chaired by Union Finance Minister Nirmala Sitharaman, Federation of Indian Export Organisations (FIEO) on December 26 urged the Centre to take steps to maximise gains for Indian exports with the United States (US) intending to impose higher tariffs on China.

As per a study conducted by FIEO, India can get additional exports worth around $25 billion due to potential tariff wars between US and China in sectors such as electronics and electricals, automotive parts and components, organic chemicals, apparel & textiles, footwear, furniture & home decor, toys, among others.

FIEO pitched for a marketing scheme focussing on the US with a corpus of Rs 250 crore per year (Rs 750 crore overall) for three years to generate additional exports by the end of this time period.

"For that we require increasing our presence in the US with showcasing in a large number of exhibitions, buyer sellers meet and tie up with large local associations of retailers and distributors in the US with proactive support of the government," FIEO President Ashwani Kumar highlighted in the pre-Budget meeting.

Sitharaman chaired the fourth pre-Budget consultation with stakeholders and experts from export, trade and industry sectors in New Delhi.

The apex trade body also suggested extending the Interest Equalisation Scheme with a cap of Rs 10 crore per exporter.

FIEO pointed out that the Interest Equalisation Scheme, which ends on December 31, 2024 with an annual cap of Rs 50 lakh for MSMEs in manufacturing, is insufficient for many of these firms.

"A long term Interest Equalisation Scheme will help the exporters to quickly conclude orders offering the most competitive rates to push our exports. This is all the more relevant for orders in which the profit margins are wafer thin and availability of interest subvention of 3 percent may help the exporters to clinch or lose the order," FIEO's Kumar said.

FIEO requested for a tax deduction of 200 to 250 percent for research and development spending under section 35(2AB) of the Income Tax Act citing that it would be crucial to drive exports especially in the sunrise sectors.

Apart from that, the trade body while acknowledging that the Shipping Corporation of India has been acquiring additional fleets, recommended infusing more equity into the corporation or encouraging a large private sector shipping line so that India can reduce dependence on international companies.

"We are remitting over $100 Bn as transport service charges annually and shipping freight is a major component of the same," Kumar said.