In his pre-Budget meeting with the Finance Ministry, Federation of Indian Export Organizations (FIEO) president Ashwini Kumar has also demanded an extension of the five percent interest equalization scheme (IES).
Higher tariffs on China could create a significant opportunity for Indian exports, says the Federation of Indian Export Organizations.
Exporters on Thursday called for a fund of Rs 750 crore over three years to tap the US$ 25 billion export potential in the US, aiming to capitalize on potential opportunities that US President-elect Donald Trump has threatened to impose higher tariffs on the Chinese. equipment
In his pre-Budget meeting with the Finance Ministry, Federation of Indian Export Organizations (FIEO) president Ashwini Kumar has also demanded an extension of the five percent interest equalization scheme (IES).
Kumar said, “A marketing scheme focusing on the US could be launched to generate additional exports of US$ 25 billion with an annual investment of Rs 250 crore (total Rs 750 crore) for three years. “
He said higher tariffs on China could create a significant opportunity for Indian exports, especially in sectors where China has previously been a dominant supplier.
Based on a study conducted by FIEO, India replaces China in sectors such as electronics and electrical appliances (USD 10 billion additional export potential), textiles and garments, toys, chemicals, auto components, footwear, furniture and home decor. can
He added that India’s marketing strategy for exporting products to the US should focus on several key areas, particularly on marketing and forming strategic partnerships.
“We have already started reaching out to key trade associations to present the India sourcing opportunity,” Kumar said. “We should focus on participating in a large number of exhibitions in these sectors,” Kumar said.
Regarding interest rates, the President said that currently IES is available only till December 31, 2024, and that too for MSME (Micro, Small and Medium Enterprise) manufacturers with an annual limit of Rs 50 lakh per IEC (import- export code). ) holder, which is insufficient for many MSMEs.
India experiences higher domestic interest rates than its competitors, particularly advanced economies or countries with export-led economies such as China, Japan, South Korea, the Eurozone, Thailand or Malaysia, he said.
This makes financing more expensive for Indian exporters than exporters from these countries.
“If the IES is extended, it will help level the playing field for Indian exporters by reducing the cost of credit, improving their price competitiveness in the global market,” he said.
“For MSMEs, we should restore the 5 per cent subsidy as it was reduced to 3 per cent when the repo rate went up to 4.4 per cent. With an increase in the repo rate of more than 2 per cent, it will be 5 per cent and 3 per cent respectively. makes a strong case for restoring the subsidy to its original level,” noted Kumar.
Exporters called for tax benefits on R&D and more equity to encourage large private sector shipping lines so that international trade is channeled through domestic shipping lines.
“We remit over US$100 billion a year in transport service charges and shipping freight is a big part of that,” he said.
Additionally, exporters from the gems and jewelery sector called for budgetary support for the diamond industry for consumer education as the sector continues to witness a decline in exports.
He suggested to the government that the level of infrastructure for jewelery parks should be increased so that developers can get easy access to bank credit.
Export Promotion Gems and Jewelery Export Promotion Council (GJEPC) is developing the world’s largest jewelery park in Mumbai.
Similar parks are being built in Meerut and Bangalore. I recommend inclusion of jewelery parks in the harmonized list of infrastructure,” said GJPEC Chairman Vipul Shah.
The council has also sought duty drawback benefits for platinum.
On the decline in export credit, FIEO director general Ajay Sahay said it was not consistent with growing exports.
“We have seen a 5 percent decline in export credit between March 2022 (Rs 2,27,452 crore) and March 2024 (Rs 2,17,406 crore). Exports have grown by 15 per cent in Indian rupee terms during that time,” Sahai said.
“Lack of collateral-free is a major challenge,” he said, adding that though the export sector is under Priority Sector Lending (PSL), credit flows have not improved.
Export credit under PSL was Rs 19,861 crore on July 1, 2022 and it has come down to Rs 11,721 crore on June 28 this year, a decline of over 40 percent, Sahay said.
Trump has threatened to impose new tariffs on Mexico, Canada and China as soon as he takes office.
The US is India’s largest trading partner in 2023-24. India’s exports stood at USD 77.51 billion, while imports totaled USD 42.2 billion in the last financial year.
The country’s exports to the US rose 6.31 percent to $47.24 billion in the April-October period of the current fiscal year, while imports rose 2.46 percent to $26 billion.
Trade experts said that if the new US administration decides to pursue the ‘America First’ agenda, Indian exporters of automobiles, Goods such as textiles and pharmaceuticals may face higher customs duties.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed. PTI)