For Indian exporters who have been sailing against the rough tides for quite some time now, the Budget 2021 remains a mixed bag.
While the county’s exporting community hailed the specific policy measures to uplift business sentiments, they also flag its missing gaps that needed speedy redressal.
Its noteworthy is India’s share in global merchandise exports currently stands at 1.67%. The industry body Confederation of Indian Industry (CII) in its Pre-Budget Memorandum 2021-22 had advocated the need for raising it to 5%. However, to achieve this ambitious target, the country certainly needs to improve its infrastructure and enhance its capacity utilisation.
It’s in this backdrop, Federation of Indian Export Organisations (FIEO) believes the Budget 2021 has rightly put its focus on infrastructure to revive the economy and support the industries providing inputs for infrastructure — which, in his view, will eventually push nation’s outwards shipments.
“A world class infrastructure will go a long way to make our manufacturing and exports competitive besides reducing the logistics cost. The setting up of seven mega investment textile parks would attract investment in the sector, bringing the cutting-edge technology and creating the economy of scale to compete with our South Asian and South East Asian competitors. The levy of agri-cess will help in creating agri infrastructure. Lack of infrastructure is also affecting the prices of agri commodities. The various facilities for fisheries will push marine exports of the country which has yet not reached anywhere near its potential,” says Sharad Kumar Saraf, President, FIEO.
As for the issues plaguing the sector, Saraf, however, urges the government to allocate the requisite funds for the Remission of Duties and Taxes on Exported Products (RoDTEP), Merchandise Exports from India Scheme (MEIS) and (Service Exports from India Scheme) SEIS so that the uncertainty is removed and exporters’ past claims may be released quickly as the same has severely eroded their liquidity.
Highlighting that privatization of the management of major ports will bring the necessary efficiency, he hopes that the government will bring a policy to develop a National Shipping Line to take a major share of India’s exim trade.
According to Arvind Goenka, Chairman, The Plastics Export Promotion Council (PLEXCONCIL), the FM presented a progressive budget to stimulate growth in the economy after a global pandemic.
Goenka further highlights that while FM stated that our manufacturing sector has to grow in double digits sustainedly to achieve a $5 trillion economy, PLEXCONCIL has been seeking the inclusion of plastics under the PLI Scheme.
“We welcome the review of 400 existing custom exemptions this year. PLEXCONCIL requests for reduction in customs’ duty on plastic raw materials. Naphtha custom duty lowered will help production of plastic raw materials. Finished goods of plastics should have attracted higher duties. We welcome the announcement to review inverted duty structure under GST but there is no allocation for MEIS shipments made for 2019-20 and 2020-21-we seek clarity on the same,” he says.
Besides big players, the country’s MSME exporting firms have also welcomed the measures announced in the budget. Murugesan R, MD, of structured cabling company, 3C3 India believes the budget offers the right impetus for small-scale exporting firms.
“The Union budget announcements primarily mean a boost to the current export footprint to manufacturers in India. With a reduction in financial burden, companies can now focus on helping India get on to the global value chain. While we primarily focused our exports on the Middle east, the announcement has incentivised expansion into America, Europe, African and APAC countries,” says Murugesan.
Stakeholders from the textile sector, which remains one of the country’s key foreign exchange earning sectors, have also given thumbs up to the budget. Apparel Export Promotion Council (AEPC) Chairman A Sakthivel called this budget to be “one of the finest budgets” considering the current situation due to the coronavirus pandemic. “The focus on infrastructure highways, railways and ports is a welcome decision as it will go a long way in improving the logistics and reduce the cost of doing business. Further, the rationalization of GST and customs will also help in easy access to raw materials and export of value-added products. The doubling of budget provision to the MSME sector with the allocation of Rs 15,700 crore in the coming fiscal will strengthen the sector,” Sakthivel says, adding a scheme to promote flagging of merchant ships would result in reducing exporters’ shipping costs.
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