Tax reforms, changes in import duties among FIEO’s recommendations to government
The Dollar Business Bureau In an attempt to clarify its stand on the requirements of the export community of India, the Federation of Indian Export Organisation (FIEO) has laid out its recommendations and complaints to the Finance Ministry. In a meeting with Arun Jaitley, Finance Minister, today, Rafeeque Ahmed, President, FIEO, said that the government should remove the National Calamity Contingent Duty (NCCD) on crude oil imports in order to support petroleum product exports which account for over 19% of India’s total exports. “Removal of this duty on imports under advance licenses, which only earns the Government a sum of less than Rs.100 crore per annum, will lead to improving the competitiveness of Indian exports,” he said. The FIEO chief also complained that exporters are facing difficulties due to the delay in payment of Duty Drawback and Central Excise Rebate claims and has requested that an urgent and permanent solution of this problem. While welcoming the introduction of the Goods and Services Tax (GST), the FIEO chief said that all the Indirect Taxes at the State level, including electricity duty, sales tax on diesel and petroleum, and turnover tax, should be brought within the rebating mechanism to make Indian products really competitive in the international market. Ahmed has also urged the government to exempt excise duty on purchase of capital goods from domestic manufacturers under the EPCG Scheme and also exempt exports from Service Tax as the refund mechanism increases transaction cost and time.
Despite the Finance Ministry’s aversion to it, FIEO has again said that the Minimum Alternate Tax (MAT) and the Dividend Distribution Tax (DDT) on SEZs must be withdrawn immediately. “This would go a long way in regaining trust and confidence of domestic and foreign investors,” said Ahmed. The Finance Minister had recently rejected the demand to remove MAT and DDT on SEZs. It was also reported that the differences between the Finance and Commerce Ministries have caused the inordinate delay in the announcement of the new Foreign Trade Policy (2014-19). FIEO has also asked for the creation of Marketing and Export Development Funds for exporters which will help in the market diversification for India. “An Export Development Fund (EDF), with focus on marketing research and innovative tools of marketing, would help not only the existing exporters but would attract new entrepreneurs in the field of exports,” said Ahmed. Other suggestions of FIEO include: discontinuation of TDS Deduction on Foreign Agent Commission; treating currency hedging at par with trading in derivatives; incentivising manufacturing firms in exports; clarifications on foreign remittances, Safe Harbour Rule for Contract Manufacturing in pharma and other sectors; continuation and expansion of Interest Subvention Scheme; and brining Export under Priority Sector Lending.
This article was published on January 6, 2015.