Exporters seek tax sops to fight demand slump

Engineering exports in Q1 fell by 7.53%

Faced with a sharp decline in shipments and battling a severe demand slowdown in the global markets, engineering exporters will approach the Prime Minister Council on Trade and Industry seeking reintroduction of tax exemption on export income among other things.

In a presentation to the Prime Minister Council on Trade and Industry, the Engineering Export Promotion Council India (EEPC), the apex body of engineering exports, said that the Section 80HHC of the Income Tax Act should be reintroduced even if it is done for a short period of time.

 “This needs to be seriously considered if the government wishes the Indian engineering exports to compete against Chinese manufacturers in world market,” EEPC Chairman Aman Chadha said in a statement.

The engineering exports have declined by 7.53 per cent in the first quarter of the current fiscal despite currency depreciation, which was negated by the rising cost of production resulting from the currency volatility, he said.

Out of the 33 engineering panels, 19 panels recorded negative growths in the month of June 2013 as opposed to 16 such panels in the month of May 2013.

He said several countries are resorting to non-trade barriers and are using anti-dumping methods to make Indian exports uncompetitive.

“This is a major worry as both USA and EU are now targeting Indian engineering goods. Earlier, raw materials like stainless steel bars and wires were targeted, now finished products like threaded rods are being also investigated. We must also try to counter this by restricting imports of these countries,” he said.

The result is that balance of trade in the engineering sector is in negative. And the reason for this is primarily because of the imports of machinery, particularly, industrial machinery. Hence, it is critical that we strengthen our capital goods sector also so that our dependence on imports of capital goods is reduced and we can export value added capital goods.