Talking Points of Shri G K Gupta, President, FIEO
for Board of Trade Meeting
1 Hon’ble Commerce & Industry Minister , Commerce Secretary , Secretary DIPP , DGFT , other senior officers , captains of industry , my colleagues –Chairman of various EPCs , ladies and gentleman . Let me compliment the Hon’ble Minister for convening the meeting of BOT before the announcement of the mid-term review of Foreign Trade Policy reflecting the changes in GST.
3 FIEO would like to compliment the Hon’ble Minister for pro-actively moving on the GST front resulting in much better concession for exports in the proposed GST Regime. However, the exporting community feels that exemption from IGST on imports under Advance Authorization should be given as has been the practice in many developing and developed countries including in 28 Member States of EU. The merchant exporters may face liquidity problem with payment of GST on procurement for exports which presently is enjoying exemption under various forms prescribed by the State Government.
4 We are of the view that growth in manufacturing can only sustain the exports. Unfortunately, investment to build new capacities in exports and manufacturing is not forthcoming. This is hurting production and employment creation. There is need to provide some fiscal support for modernization and expansion of the production base as technology infusion is a key to competitive manufacturing. It would be worthwhile if investment linked income tax benefits are allowed particularly to the MSME units, where capital employment ratio is very high.
5 One of the reasons affecting India’s exports is extremely low share of Indian brands in exports. To enhance India’s export, it is necessary that a good Brand name is developed by the exporter. However, it involves huge expenditure. Individual exporters may not afford the cost of building brands . In order to boost the export of branded value added products, Department of Commerce should consider introducing Branded Product Scheme where 5% benefit may be provided to the exporters of branded products. Branded products will establish image of India as a supplier of quality products in world market besides increasing per unit realization.
6 India is blessed with high quality artisans and women entrepreneurs. The e-commerce market place is ideally suited to them as both genuine buyers and payment is ensured by the market place. Unfortunately, the issues in e-commerce retail exports have not been resolved despite recognizing e-Commerce in the Foreign Trade Policy. e- commerce has huge export potential and a seamless eco-system may be provided for such exports so that all the duties and taxes are refunded and exports benefits are available to e-commerce exports. Provisions may also be made for imports of refund goods exported through e-commerce which are, for normal exports, exempted from import duties upon refund of exports benefit.
7 The cost of capital to export sector is still much above the international benchmark. Though 3% Interest Equalization Scheme has been extended to MSME manufacturing units and certain labour intensive sectors, but merchant exporters, though covered in the definition of MSME, have been excluded in the Scheme. Merchant Exporters may also be given Interest Equalization benefits.
8 Sales to foreign tourists can be an effective mean for promoting exports of handicraft, textiles and gems & jewellery sectors besides tourism. However, there is no recognition of such sale even though the proceeds are realized in foreign currency. The new GST Regime has made a beginning by providing refund of GST to foreign tourists at the airport. The same should be supplemented by grant of exports benefit like MEIS on such sale. This will encourage foreign tourists to purchase goods at competitive prices benefitting small and rural artisans. We have already provided broad features of the Scheme to DGFT.
9 There is an immediate need for a focused strategy for retaining as well as promoting our exports to our border nations like Nepal, Bangladesh etc. where China is entering in a big way. Our exports with border nations excluding China was USD 17.42 billion as against China’s export of USD 45.40 billion to our neighbors. Overall import demand in these markets was around USD 128.95 billion in 2016. A proper strategy could add USD 15-20 Billion dollars in our export basket in next 3 years.