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Address the liquidity and manufacturing constraints to boost exports: TPCI

Press Release:

Address the liquidity and manufacturing constraints to boost exports: TPCI

Focus on agri exports and food processing to address farm distress

New Delhi, 6th June 2018: Trade Promotion Council of India (TPCI) released the list of demand as part of the budget expectation today. Speaking on the budget demand Chairman TPCI said, “India is at the cusp of global attention as its reputational and business equity has been growing sustainably at global stage. The government needs to address liquidity and manufacturing constraints by increasing the leaning cap of the nationalised banks for credit financing and ensure adequate liquidity. The private players including NBFCs may also be allowed.”

Further Singla said, “The focus on agri-exports and food processing can take India to the position it has been aspiring since long. Also, it has the great potential to address the farm distress and employment generation two issues the country has been struggling in recent times.”

Various measures suggested by TPCI are as below:

Tax

Corporate Tax

 The corporate tax was announced to be reduced to 25% in 2015, today it is 30% (for companies with annual turnover of 250 crore). The corporate tax reduction of 5% may be extended to all entities irrespective of cap. This will also help attract FDI to India.

Tax Deductions on Product Development & R&D

 R&D should include product development and its value chain, as well so that the same tax benefit is realized by exports sector. Product development is the entire process of designing, creating, and marketing new products or existing products with new features, therefore at all stage they need to be incentivised.

Exports

 Incentivising the exporters whose geographical diversification is more and not concentrated in terms of outreach and extension product and country wise.

 Incentivise thrust sectors like furniture and electrical where India has huge competitive advantage to boost exports

 The government has extended IGST (Integrated Goods and Service Tax) and compensation cess exemptions for goods procurement under certain export promotion schemes till March 31, 2020. This may be thought of a permanent call instead of an extension. These are:

• Advance Authorization Scheme
• EPCG Scheme
• EOU Scheme

Assistance in setting up the manufacturing Plant in Foreign Country

Companies want to tap full potential of their foreign factories. They establish and manage their foreign plants to benefit only from tariff and trade concessions, cheap labor, capital subsidies, benefits of trade agreement and reduced logistics costs. This is going to increase India’s presence in foreign economy, like the Chinese companies are doing in African region and Latin American region especially for MSME.

 The interest subvention should be expanded for the entire MSME sector rather than only for export purposes.

Agri- Exports and food processing

 Tax incentives for companies investing in organic farming including horticulture. Restrict tax concessions to only farms which either do organic farming or export.

 Tax holiday for five years for companies investing in food processing sector

 Companies working in areas of GIs and IPRs need to be incentivised

Manufacturing

 This budget must address supply constraints to make the export industry competitive, incentives therefore should focus on the supply side of manufacturing. We need to build upon our production capabilities and reduce the trade deficit with competing countries.

 Incentives may be given to lead firms in ancillary manufacturing to create an ecosystem from where domestic manufacturing can take place

Infra and logistics

 Tax holiday of at least five years may be given for investors in infra and logistic chain
Easy credit and liquidity

 Availability of easy loan for the intermediately goods to be used in production of finished products for exports.

 Address the shortage of export financing by increasing the total lending cap for the national banks and export guarantee for places, where there is no banks.

For any further information, contact:

Sameer Pushp

DIRECTOR-
MEDIA & CORPORATE COMMUNICATIONS
9, 2nd Floor, Scindia House, Connaught Circus,

New Delhi- 110001, India

T: (91) 11 40727281

M: (91) 9811229110

E:  sameer.pushp@tpci.in

W: www.tpci.in