Develop Indian shipping lines, lower duty on precious metals: Exporters in pre-Budget meet
NEW DELHI : As Covid-19 and the ongoing Red Sea crisis pushed shipping rates several fold higher, hitting exports, exporters have urged the government to develop Indian shipping lines of global repute to boost exports. At the pre-Budget consultation meeting chaired by Finance Minister Smt. Nirmala Sitharaman on Tuesday, traders also asked for lowering duty on imports of precious metals to arrest decline in gems and jewellery exports.
Federation of Indian Export Organisations (FIEO) President Mr. Ashwani Kumar suggested the government to extend the Interest Equalisation Scheme (IES) for five years. The scheme is aimed at compensating them for a portion of the interest on loans. Gem and Jewellery Export Promotion Council (GJEPC) Chairman Mr. Vipul Shah, at the meeting, sought removal of equalisation levy for rough diamonds highlighting that gems and jewellery exports declined 30 per cent during the last financial year and have already slipped 15 per cent to date this year.
“We request focus for developing an Indian shipping line of global repute. India’s outward remittance on transport services is increasing with rising exports. We remitted over $109 billion as transport service charge in 2022. As the country moves towards the goal of $1 trillion (goods exports), this will touch $200 billion by 2030. A 25 per cent share by the Indian shipping line can save $50 billion year-on-year basis. This will also reduce arm twisting by foreign shipping lines, particularly of our micro, small and medium enterprises (MSMEs),” Mr. Ashwani Kumar said at the meeting. Weeks after the attacks in the crucial Red Sea shipping route, Asia-to-North Europe rates had more than doubled to above $4,000 per 40-foot container. Exporters complained about the additional surcharge that was seen as arbitrary during crunch times for exports. Indian goods exports during the last financial year slipped near 5 per cent amid decline in demand from Western countries.
He said that the IES is helping exports and that the scheme should be extended for five years. The scheme is valid till June 30, 2024. “Looking into the rise in interest rates consequent to increase in repo rate from 4.4 per cent to 6.5 per cent in the last 2 years, The subvention rates may be restored back from 3 per cent to 5 per cent for manufacturers in MSMEs and from 2 per cent to 3 per cent for all in respect of 410 tariff lines,” Mr. Kumar added.
Exporters also sought funds for research and development, arguing that 35 out of 38 Organisation for Economic Co-operation and Development (OECD) countries provide either lower tax or higher deduction on R&D expenditure. “We request that the weighted tax deduction under Section 35(2AB) may be increased to 250-300 per cent and the benefit under Section 35(2AB) may also be extended to Limited Liability Partnership (LLP), Partnership Firms and Proprietary firms, as MSME units largely fall in these categories,” FIEO stated.
Mr. Vipul Shah sought reduction in import duty on gold bar from 15 per cent to 4 per cent on grounds that it will ensure that duty blockage of around Rs 982.16 crore resulting in more working capital in hand for industry. “Untapped export potential for gold jewellery can be realised with more working capital (at least $2 billion of $11 billion in a medium period of 2 years). GJEPC has sought reduction in import duty on silver bars from 10 per cent to 4 per cent; and reduction in import duty on platinum bars from 12.5 per cent to 4 per cent,” Shah said in the meeting.
India’s gem and jewellery industry heavily relies on imports for its raw materials, including gold, diamonds, silver, and colored gemstones, Shah said, adding that these materials are brought into the country and undergo either cutting and polishing or are transformed into finished jewellery before being exported worldwide.
“This thriving industry sustains approximately 4.3 million jobs, contributes about 10 per cent to the country’s merchandise exports, and significantly impacts the overall economic growth,” he added.