Union Budget 2022 will be MSME and Export Oriented: FIEO

New Delhi: While Finance Minister Nirmala Sitharaman and her team are busy giving the final touch to the Union Budget 2022, the Federation of Indian Exporters Organisation has said that this year focus of the Budget will be on Micro, Small and Medium Enterprises (MSME) and Export oriented.

Union Budget 2022-23 will be presented by Union Finance Minister Nirmala Sitharaman on Feb 1 in Paperless form: Union Finance Minister pic.twitter.com/X8sVm18f9V

— ANI (@ANI) January 27, 2022

In an interview with ANI, FIEO President A Sakthivel said that Indian exports are on the upswing and we are within the range of reaching the milestone of $400 billion during the current fiscal year.

The order booking position of exporters across sectors is extremely encouraging, assuring us of continuing on the growth trajectory next fiscal as well. However, the logistics and a few challenges are of grave concern to them. Shortage of containers, abnormal increase in freight, and space constraints on ships are impacting our exports.

Sakthivel suggested that container manufacturing should be encouraged more so as we are also pushing coastal shipping in our country. A Production Linked Incentive (PLI) kind of scheme for container manufacturing can come in handy to encourage domestic manufacturing of containers addressing some cost disadvantages.

We also need to develop an Indian shipping line of global repute. We may be remitting over $75 billion or more as freight charges this year. An Indian shipping line, which gets 25 per cent of this business can save $17-20 billion on a recurring basis annually, he said.

Sakthivel urged Finance Minister to encourage MSMEs by providing a double tax deduction for overseas marketing so that for example for every $1000 spent on global marketing, $2000 may be provided as tax deductions under the income tax for specified kinds of overseas marketing for market exploration, market penetration, and market promotion.

FIEO also suggested to extend The Emergency Credit Linked Guarantee Scheme (ECLGS) for one more year and
Interest Equalisation Scheme (IES) requires extension with effect from 1st October 2021 at least for 3 years.

FIEO President highlighted the urgent need for R&D and product development to sustained exports. 200-300 per cent tax deductions may be provided on investment in R&D and product development for a long-term exports strategy to increase value addition and diversify the exports base as well.

Shakthivel said that in Budget we need to provide a higher budget for agri exports more so for the Transport and Marketing Assistance (TMA) Scheme and backward and forward linkages in the agri sector.

Sakthivel said that another sector is Services where govt needs to focus. The services sector is not getting any support as SEIS benefits are also no longer available. The travel & tourism sector has been hit heavily due to pandemic and needs to be given encouragement.

Mode-2 of services (service provided to a Foreign national in India paid in free foreign currency) have neither been provided exemption from IGST nor refund of the accumulated input tax credit.

“While we appreciate the new provision incorporated under Section 15 of IGST Act providing the refund of IGST on the supply of goods to tourists leaving India at the International airports, it is equally necessary that no taxes are imposed on the services being provided to them during their stay in India. The travel tourism sector including hotel and hospitality is already burdened with high taxation and tourists are preferring South East Asian countries,” he added.

Tourism has one of the highest capital employment ratios and therefore, refund of IGST/ITC facility to Mode-2 of services will go a long way in providing competitiveness to the sector and helping the country to take its tourism earning to $100 billion in the next 5 years, he said.