Against the backdrop of Commerce Ministry preparing the India’s Foreign Trade Policy, CII has suggested measures that would aid in achieving the $500-billion exports target by 2014-15.
The industry body has demanded for inclusion of the U.S. under the Focus Market Scheme (FMS) and roll back of minimum alternate tax on Special Economic Zones (SEZs).
“Focus Product Scheme and FMS has really helped us to go into new territories and push products into new markets. With India’s exports declining, why not include the US into FMS that will give competitive advantage,” CII Chairman of National Committee on Exports and Imports Sanjay Budhia said.
Introduced in April 2006, the FMS aims to offset high freight cost to certain select international countries with a view to make India more competitive in those markets.
It allows duty credit of 2.5 per cent of FOB (free-on- board) value of exports to countries that are identified as Focus Markets by the Government.
He has also asked the government to extend loans to exporters at affordable rates. “We would suggest government that maximum 9 per cent interest rates for exporters and 7 per cent for SMEs must be fixed,” he said.
About special economic zones (SEZs), he said that the government should withdraw the imposition of MAT.
“Why should we be in SEZs? Tax free regime is gone, you are subject to 20 per cent tax. New SEZ developers are going for denotification. Government should rollback MAT and DDT,” he added.
Exports from SEZs contribute about 34 per cent in the country’s total merchandise exports.
“Its future is very bleak...SEZ has come into a certain sort of standstill. We need to push it forward,” he added.
In the last Union Budget, government imposed a minimum alternate tax (MAT) of 18.5 per cent on the book profits of SEZs developers and units.
About the current fiscal, Mr. Budhia said that despite the global slowdown, India’s exports would touch $300 billion.
From a peak of 82 per cent in July 2011, export growth has slipped to 44.25 per cent in August 2011, 36.36 per cent in September 2011 and 10.8 per cent in October last year.