Faced with a sharp decline in shipments and battling a severe demand slowdown in the global markets, Indian exporters will approach the Prime Minister Council on Trade and Industry seeking reintroduction of tax exemption on export income and tit-for-tat treatment to countries dumping goods into the Indian market, informed the EEPC India Thursday.
In a presentation for the Prime Minister Council on Trade and Industry, the EEPC India, the apex body of engineering exports, said that the Section 80HHC of the Income Tax Act should be re-introduced even if it is done for a short period of time.
"This needs to be seriously considered if the Government wishes the Indian engineering exports to compete against Chinese manufacturers in world market," EEPC India Chairman, Aman Chadha said in a statement.
The engineering exports have declined by 7.53 percent in the first quarter of the current fiscal despite currency depreciation, which was negated by the rising cost of production resulting from the currency volatility, EEPC Chairman Aman Chadha said. Out of the 33 engineering panels, 19 engineering panels recorded negative growths in the month of June 2013 as opposed to 16 such panels in the month of May 2013.
He said several countries are resorting to non-trade barriers and are using anti-dumping methods to make Indian exports uncompetitive.
"This is a major worry as both USA and EU are now targeting Indian engineering goods. Earlier, raw materials like Stainless Steel bars and wires were targeted now finished products like threaded rods are being also investigated. We must also try to counter this by restricting imports of these countries or at least investigating the exports of their products to India," he said.
The result is that balance of trade in the engineering sector is in negative. And the reason for this is primarily because of the imports of machinery, particularly, industrial machinery. Hence it is critical that we strengthen our capital goods sector also so that our dependence on imports of capital goods is reduced and we can export value added capital goods.
The EEPC India which would be organising a major fair - IESS at Mumbai during 22-24 January 2014 , has also impressed on the government at the highest level to make available credit to exporters at a concessional rate to stem the export slide.
"Unless both working capital and Rupee export credit rates are lowered by at least 4 percent, we will not be able to compete in a meaningful manner," he said.
On the review of the free trade agreements with various countries and blocs, the EEPC India has been receiving complaints with regard to inverted duty structure which takes away incentives on domestic manufacturing
The EEPC India is also seeking streamlining and review of the duty drawback rates to make exporters competitive. The Duty Drawback Rates do not correctly measure the hidden taxes that exits
"Thus, many local levies like octroi, Entry Tax, Electricity duties are not compensated by the present Drawback rates. Further, exporters face high infrastructural costs and arbitrary freight increases. The Duty Drawback rate must take these hidden taxes/costs into account. Accordingly, we suggest that the drawback rates be increased by 25 percent across the board to offset such handicaps of our exporters," Chadha added.
