New Delhi, November 26, 2016: The FIEO President Mr S C Ralhan raised certain issues, during the Pre-Budget Consultation Meeting of Leaders from the Industry and Trade with the Finance Minister on Saturday at New Delhi.
The issues raised were as under:
1. The Credit Linked Capital Subsidy Scheme (CLCSS) has helped the small scale sector to modernize and expand their production. The CLCSS limit was fixed at Rs 1 Cr about a decade back and therefore, the limit under CLCSS may also be enhanced from Rs.1 Cr to Rs.5 Cr.
2. Countries are supporting aggressive marketing to get limited orders available globally with slowdown in global trade. Government should create an Export Development Fund for aggressive marketing particularly for MSME by providing a corpus of about 0.5% of previous year exports as the present support through marketing scheme is inadequate.
3. The merchant exporters contribute to over 40% of country’s exports. These exporters are presently exempted from VAT/CST while taking goods for exports. However, such exporters will be subject to IGST which will block their capital and thus reduce their competitiveness. Government should allow exemption from IGST to merchant exporters against a running bond which may be debited while taking supply and credited when proof of exports is provided. Since GSTN and ICEGATE will be linked, this can be easily implemented.
4. Government of India has extended 3% Interest Equalization Scheme to MSME manufacturing units and certain labour intensive sectors. However, merchant exporters, though covered in the definition of MSME, have been excluded in the scheme. Merchant Exporters may also be given Interest Equalization benefits.
5. Government needs to be complimented for undertaking the most radical reform with far reaching results in the history of independent India through demonetization. This will change the shape of Indian economy, Indian politics and even the Indian society. The demonetization will hugely benefit the GST regime which requires all transactions are properly accounted for. However, like any big reform or change, it has its teething problem. Payment of wages to workers is a challenge. Many of them coming from distant areas may not have bank account at their place of works Those taking small quantities like fruits & vegetables from farmers or handicraft from artisans or sending goods for job work are also reporting the same problem. The transportation of raw material and finished goods has also been delayed. The withdrawal limit may be increased to 1% per month of previous year turnover from Rs 50000 per week. The said limit can easily be operated by the banks as they have access to the balance sheet and turnover details of each firm/company.
6. Besides the detailed Memorandum of FIEO on indirect tax changes has already been submitted for consideration.