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Last updated: 28 Nov, 2016  

FIEO-logoTHMB Pre-Budget Consultation: FIEO stresses on issues of SMEs

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Saurabh Gupta | 28 Nov, 2016
The apex exporters body the Federation of Indian Export Organizations (FIEO) has raised various issues especially the issues of small exporters, during the Pre-Budget Consultation Meeting of leaders from the industry and trade with the Finance Minister on 26th November in New Delhi.

FIEO President S C Ralhan informed the Finance Minister that 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, he said that the limit under CLCSS need to be enhanced from Rs.1 Cr to Rs.5 Cr.

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 Micro, Small and Medium Enterprise (MSME) by providing a corpus of about 0.5 percent of previous year exports as the present support through marketing scheme is inadequate.

The merchant exporters contribute to over 40 percent 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, he added.

He said that the Government of India has extended 3 percent 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.

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 percent 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.

Besides the detailed Memorandum of FIEO on indirect tax changes has already been submitted for consideration.
 
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