With their order books shrinking and credit costs rising, exporters on Thursday urged Finance Minister Nirmala Sitharaman to reintroduce interest subsidies, grant tax breaks for overseas marketing spends, and expand ‘inadequate’ allocations for the Commerce Ministry’s export promotion schemes in the forthcoming Union Budget.
Observing that the rupee’s decline against the U.S. dollar has not been as steep as other currencies, the Federation of Indian Export Organisations (FIEO) president A. Sakthivel indicated that the Indian currency’s relative strength was, however, affecting the competitiveness of exports, which need support. He was speaking at a Budget consultation meeting held by the Finance Ministry with representatives from the trade and services sectors.
Terming the allocations to the Department of Commerce as insufficient for spurring exports, FIEO pointed out that the Remission of Duties, Taxes on Export Products (RoDTEP) scheme which is meant to provide ‘zero rating’ of exports, had excluded sectors like chemicals, pharmaceuticals, iron and steel.
“When global demand is declining, it becomes all the more necessary to go for aggressive marketing. However, most Indian companies were cutting marketing spends in view of contraction,” Mr. Sakthivel said, adding that this would hurt prospects of ‘getting whatever little demand there is” currently and even when the global situation improved.
Micro, Small and Medium enterprises (MSMEs) needed more support, he noted, adding that credit costs for most smaller firms were now between 11% and 13% and would likely increase further in the coming months. “There is an urgent need to restore the interest equalisation benefit of 5% to manufacturer MSMEs and 3% to all 410 tariff lines as existed prior to October 2021, as cost of credit has crossed the pre-COVID level and is adversely impacting exporters,” Mr. Sakthivel said.
