2022 budget: The 2022 budget will be geared towards MSMEs and export: FIEO

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New Delhi: As Finance Minister Nirmala Sitharaman and her team are in the process of putting the finishing touches on the 2022 Union Budget, the Federation of Indian Exporter Organizations says that this year the focus of the budget will be focused on micro, small and medium enterprises (MSMEs) and export oriented.

In an interview with ANI, FIEO Chairman A Sakthivel said that Indian exports are on the rise and we are on track to hit the $400 billion mark in the current financial year. The order intake position of exporters in all sectors is extremely encouraging, ensuring that we continue on the growth trajectory also in the next financial year. However, logistics and a few challenges are of great concern to them. The shortage of containers, the abnormal increase in freight and space constraints on ships are impacting our exports.

Sakthivel suggested that container manufacturing should be encouraged more as we are also pushing coastal shipping in our country. A type of production-linked incentive (PLI) program for container manufacturing can be useful in encouraging domestic container manufacturing by addressing some cost disadvantages. We also need to develop a world-class Indian shipping line. We may be remitting over $75 billion or more in transportation costs this year. An Indian shipping company, which gets 25% of this business, can save $17 billion to $20 billion on a recurring basis every year, he said.

Sakthivel urged the Minister of Finance to encourage MSMEs by offering a double tax deduction for overseas marketing so that, for example, for every $1,000 spent on global marketing, $2,000 can be provided under form of income tax deductions for specific types of overseas marketing for market exploration, market penetration and promotion. The FIEO also suggested extending the Emergency Credit Linked Guarantee Scheme (ECLGS) for another year.

The Interest Equalization Scheme (IES) requires an extension from October 1, 2021 for at least 3 years. The FIEO President highlighted the urgent need for R&D and product development to support exports. Tax deductions of 200-300% can be granted on investments in R&D and product development as part of a long-term export strategy aimed at increasing value addition and diversifying the export base as well .

Sakthivel said that in the budget, we need to budget more for agricultural exports, more so for the Transport and Marketing Assistance (TMA) program and forward and backward linkages in the agricultural sector.

Sakthivel said another sector is services which the government needs to focus on. The service sector does not receive any support as SEIS services are no longer available either. The travel and tourism sector has been hit hard by the pandemic and needs to be encouraged. Mode 2 of services (service provided to a foreign national in India paid in free foreign currency) did not benefit from either an exemption from IGST or a refund of accrued input tax credit.

“While we appreciate the new provision incorporated in Section 15 of the IGST Act providing for reimbursement of IGST on supply of goods to tourists leaving India at international airports, it is also necessary that no tax be imposed on the services provided to them during their stay in India.The travel tourism sector, including hospitality and hospitality, is already burdened with high taxation and tourists prefer South Asian countries -Is,” he added.

Tourism has one of the highest capital employment ratios and therefore the repayment of the IGST/ITC facility to mode 2 of services will go a long way to ensuring the competitiveness of the sector and helping the country to raise its tourism revenue to $100 billion in the next 5 years, he said.

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