Budget 2024: EEPC India pushes for export boost, calls for higher interest subvention

In its pre-budget recommendation, EEPC India has suggested restoring the interest subvention to 3% for the specified 410 tariff lines besides raising the subvention rate to 5% for MSME manufacturers exporting under any tariff line.

“Considering the rise in the repo rate from 4.4% to 6.5%, we have requested to restore the interest subvention rate to 3% for the specified 410 tariff lines. We also requested that for Micro, Small, and Medium Enterprises (MSME) manufacturers exporting under any tariff line, the interest subvention rate be increased to 5%. Merchant exporters have low-profit margins, and the cost of credit affects their viability significantly. Therefore, we have requested to extend the Interest Equalisation Scheme to merchant exporters with a 3% subvention rate,” EEPC India chairman Arun Kumar Garodia said.

According to Trade Notice No 07/ 2024-25, the Interest Equalization Scheme has been extended for two months but only for MSMEs. It also says that the claims from non-MSME exporters will not be accepted beyond 30th June 2024.

Earlier, merchant exporters and large exporters were eligible for Interest Equalization Scheme benefits for 410 tariff lines. Most of these sectors are labour-intensive operate on low margins and face tough competition from their global counterparts. Denying the scheme for merchants and large exporters will hurt them badly, which was earlier helping them to be globally competitive.
EEPC India has also proposed that a weighted deduction of 150% in respect of expenditure incurred in R&D be reinstated.

To help MSMEs improve their carbon footprint, EEPC India has in its pre-budget recommendations to the government requested 100% Depreciation for investment in Solar Power generation by MSME units. Such dispensation was given previously for wind power generation and should similarly be given for solar power generation.EEPC India has also proposed that MSME manufacturing units that are Partnership/LLP/Sole Proprietor be given an Income Tax slab of 25% with the condition that they plough back this extra 10% in the Business. This will give MSMEs an extra cushion of 10% for expansion/working capital improvement and improve their liquidity. This will also generate employment due to the expansion undertaken by MSME units. To ensure that this 10% is kept in business there can be a condition that Partners can withdraw a maximum of 90% of profits. Engineering goods industry accounts for 25% of the country’s total exports and is the largest foreign exchange earner. Notably, MSMEs account for 35-40% of total engineering exports and therefore are crucial job providers.

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