Invest wise with Expert advice

Budget expectations: Manufacturer exporters

17 Jan 2022 , 06:10 PM

Name of the product	Proposal	Reasons/ Justification	Likely impact on exports
Copper ores and Concentrates	Reduction in custom duty of Copper ores and Concentrates from 2.5% to 0%.	Due to limited copper ore reserves, Indian copper industry rely on imports of copper concentrate which are majorly imported from Chile and Indonesia, enjoying nil duty under India-Chile PTA and India-ASEAN FTA respectively. A higher duty rate compels import of Copper Ores and Concentrates through preferential route whereas if the duty be reduced to zero, Indian industry will be able to explore options other than Chile and Indonesia for sourcing copper concentrate and get away with high market concentration. Thus, the proposal for reduction in custom duty of Copper ores and Concentrates from 2.5% to 0 shall be considered. Ores and concentrates being the reserves/wealth of the nation are being encouraged to be imported on zero tariffs in developed nations such as Japan, as the cheaper availability of the same will result in making indigenous industry competitive in manufacturing of value added/downstream products. Since Japan has minimal/negligible reserves of copper ores and concentrates yet they are major exporters of the copper cathodes to India which cannot be manufactured without the availability of copper ores and concentrates at a competitive price.	Owing to ample availability of the ores at the competitive price, the primary products will be available at the reasonable value in the domestic market giving a good impetus to the manufacturing of downstream products, ultimately, resulting in the growth of exports of the downstream/value-added products
Inclusion of Iron and Steel products under Ch. 73 in the RoDTEP scheme	Inclusion of Iron and Steel products under Ch. 73 in the RoDTEP scheme	The rates of Iron and Steel have skyrocketed since the advent of COVID 19. Thus, the manufacturers of the iron and steel products are finding it difficult to sustain their businesses. Despite of these price challenges they have been trying hard to survive as majority of segments in this sector operate on minuscule margins and in dire needs of the support from the government. It is therefore requested to extend the benefits of RoDTEP scheme to the sector equivalent to existing ones under MEIS scheme.	It will help in making the products competitive in international markets enabling the good growth in exports
Other: Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters	Custom duty exemption can be withdrawn on goods for use in manufacture of refrigerator compressor	In our view the exemption can be withdrawn as this will help in giving an incentive for domestic parts for use in refrigerator compressors.	N A
Overload protector	Custom duty exemption can be withdrawn on over load protector	There are overload manufacturers in India and hence there is no need to retain exemption	N A
Evacuated tubes with layers of solar selective coating	Custom duty exemption can be withdrawn on over load protector	Exports and imports are in the similar range. India does have domestic manufacturers of this product and the exemption can be done away with.	N A
Atmospheric water geyser	Custom duty exemption can be withdrawn on atmospheric water geyser	Imports outstripping exports with a quality specification of IS302. Much of the imports is from China, perhaps on the grounds of cheaper price. It is not clear as to whether exemption still exists and if it does, it may be removed as that would garner revenues for the Government and the product is perhaps inelastic. The higher import prices will be passed on the consumers who do have the ability to pay. So it will be help the Government revenues to the extent of the imports	N A
Mica glass tape	Custom duty exemption can be withdrawn on Mica glass tape	Imports are not huge for Mica glass tape under 8544. Thus, exemption may be removed as that would garner revenues for the Government	N A
Corporate Tax	In order to promote growth and investment, a new provision had been inserted from FY 2019-20 which allows any domestic company an option to pay income-tax at the rate of 22% and new domestic company incorporated on or after 1st October 2019 making fresh investment in manufacturing, at the rate of 15% subject to condition that they will not avail any exemption/incentive. The effective tax rate for these companies shall be 25.17% and 17.01% inclusive of surcharge & cess. Also, such companies shall not be required to pay Minimum Alternate Tax. As Limited liability partnerships, partnership firms and sole proprietorship firms are denied the benefit of a lower corporate tax, it is suggested to extend the benefit to them.	The lower corporate tax was to provide them with higher investible surplus which in turn will create more jobs. But based on the Indian industry structure, 84 % of the universe of small businesses were being denied the benefit. If the tax cut is to kick start an investment cycle by leaving more money at the hand of the business entities, then firms and LLPs should also get the benefit as they constitute majority of the pie and is required for the upliftment/growth of MSMEs	Indirectly the move will support the growth in exports
Interest & penalty u/s 234 A/B/C of The Income Tax Act	Relief from interest & penalty u/s 234 A/B/C of The Income Tax Act	As we are all aware, the country experienced a devastating 2nd wave of COVID19 in Q1 of AY 22-23 (FY 21-22). On account of the instructions of Local Authorities & diversion of key inputs (such as oxygen, etc.), smaller units were forced to shut operations. The decision of The Government of India to divert critical industrial inputs (such as oxygen, etc.) to the health sector was laudable and was wholeheartedly supported by The Industry. However, due to a combination of these factors, MSME’s could not operate their units in Q1. Revenues were literally zero and cash flows were negative. Further, there are reports every day in the media, which project a 3rd wave of COVID-19 in the coming months. This is adding to the woes of an already confused segment of organizations (MSME’s). In this scenario, it is not feasible for small unit to project revenues and profits for the whole year and pay corresponding installment of Advance Income Tax. If the unit does not make these payments, they are liable to pay interest and penalty at onerous rates. Hence, it is our humble request that small tax payers with a total Income Tax liability of ` 50,00,000.00 be exempted from paying interest and penalty under Section 234 A/B/C of The Income Tax Act for AY 22-23.	N A
Interest Equalization Scheme for MSME Sector	At present, the RBI’s interest equalization scheme is for Rupee Export Credit. There are two variants of the scheme. A 5% interest equalization for the MSME Rupee export credit while a 3% interest equalization for 416 tariff lines and Merchant Exporters who export these 416 tariff lines. It is our suggestion that the scheme should be extended till 31^st March 2024. .	The cost of credit for MSME sector ranges from 9-12% and hence the scheme should be extended till 31^st March 2024.	N A