FIEO seeks SOPs for overseas marketing of exports

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Encouragement to overseas marketing for exports, fiscal and tax support to address logistics challenges and developing an Indian shipping line of global repute are the key recommendations from the Federation of Indian Export Organisations (FIEO) for incorporation into the Union Budget 2022-23.

In a pre-Budget consultation meeting with Finance Minister Nirmala Sitharaman on Thursday, FIEO president A Sakthivel highlighted the need to bring in double tax deduction scheme for internationalizations to allow exporters to deduct against their taxable income and to encourage overseas marketing for exports.

Overseas marketing is a big challenge for exporters, more so for MSMEs, as it entails a very high cost. The taxable income is twice the qualifying expenses incurred for approved overseas activities including market preparation, market exploration, market promotion and market presence, said Sakthivel, suggesting a ceiling of USD 5,00,000 be put under the scheme so that investment and tax deduction are limited just like Singapore which is providing a similar facility to its SME units for aggressive marketing.

Exporters have been facing an acute shortage of containers and are dependent on imported containers, particularly from China, which produces over 80% of global containers using a special kind of steel that gives them competitive edge. Sakthivel suggested fiscal benefits to encourage domestic manufacturing of containers to help exporters.

The export body has also sought redressal of the challenge posed by rising freight cost and dependence on global shipping companies as Indian shipping lines have a minor share in India’s global trade. Since the Shipping Corporation of India is being disinvested, there is need to encourage large Indian entities to build an Indian shipping line of global repute. Such a line, even with 25% of the total business, can bring savings of USD 30- 40 billion annually and reduce dependence on foreign shipping lines. The tax advantage availed by shipping lines in some countries may be considered to encourage them to register such ships in India.

Another incentive sought by FIEO is that services rendered to foreign national and paid in free foreign currency be given IGST/ITC refund. Robust growth in services exports driven by IT and IT enabled services, non-availability of SEIS benefits to services sector and impact of the pandemic on travel and tourism call for this consideration, according to Sakthivel. Moreover, Mode-2 of services (service provided to a foreign national in India paid in free foreign currency) have neither been provided exemption from IGST nor refund of accumulated input tax credit.

“While we appreciate the new provision incorporated under Section 15 of IGST Act providing the refund of IGST on supply of goods to tourists leaving India at the international airports, it is equally necessary that no taxes are imposed on the services being provided to them during their stay in India,” said the FIEO president.

As tourism has one of the highest capital employment ratios, refund of IGST/ ITC facility to Mode-2 of services will help to provide competitiveness to the sector and take tourism earning to US$ 100 billion in the next 5 years, the FIEO president said.

Source from: http://www.uniindia.com/fieo-seeks-sops-for-overseas-marketing-of-exports/business-economy/news/2596258.html

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