SME Times News Bureau | 27 Jan, 2012
India's aerospace and defence exports are likely to clock $2 billion in fiscal 2011-12 to March 31, industry lobby Assocham says.
With about 18 percent growth in the first three quarters of 2011-12, aircraft exports, including components, stood at about $1.31 billion against $1.11 billion in the corresponding period of 2010-11, Assocham said.
Parts and components alone have contributed a whopping 96 percent of the total aerospace exports, highlighting India's manufacturing capability oriented towards tier I, II and III suppliers against original equipment manufacturers (OEMs), it said.
In the interest of top-level private defence equipment manufacturers and exporters, Assocham has sought exemption from input tax and levies for their contractors and sub-contractors by issue of customs and excise duty exemption certificates on the lines of defence public sector undertakings (DPSUs).
"Issuance of customs and excise duty exemption certificates to DPSUs to claim exemption from input tax and levies is making the exports by private sector exporters uncompetitive by about eight percent," said the industry lobby.
Speaking about the lack of proper definition of defence products, "which is imperative for aerospace and defence sector to be able to access policy support and incentives for exports", Assochan said due to this, "government support remains ad hoc, lengthy and unnecessarily litigative".
A long and delayed clearance process of about three months for genuine exports of defence products to qualified countries from India is a "pain" for the majority of exporters, Assocham said, urging "sops like incentives and benefits on taxation dues and levies to this sector that has remained limited and skewed against private players".
"Besides, the government outlook on structural and taxation benefits to dedicated aerospace and defence manufacturing hubs also remains non-committal," said the chamber.
According to Assocham, the current rate of indirect taxes on Maintenance, Repair and Operations (MRO) activities are quite high, making them uncompetitive as customs duty is exempt on parts imported for MRO of aircraft subject to specified conditions which if not satisfied would impose customs duty in the range of 19 percent to 27 percent on the imported parts.
Assocham has also suggested the government introduce defence as a priority sector for entities like the Engineering Export Promotion Council (EEPC). A defence export award must also be instituted, it said.
