New Delhi, July 3 (KNN) The Federation of India Exporters Association (FIEO) has demanded Export Development Fund with a corpus of 0.5% of export value for Micro, Small and Medium Enterprises (MSMEs) in the upcoming budget 2019.

In its charter of wish list, the exporters' body said “For MSME exporters, marketing and showcasing of their products require substantial expenditure. The current support extended through various scheme is grossly inadequate. We require an export development fund with a corpus of 0.5% of export value so that MSMEs aggressively participates in international exhibitions and trade shows.”

FIEO demanded tax deduction on R&D investments, cut in corporate tax, reducing customs duty on capital goods which are not produced in the country, and higher budgetary allocations for the Department of Commerce.

It said, “The corporate tax reduction may be extended to all entities particularly as it will attract FDI also more so in view of the fact that US has reduced corporate tax from 35% to 21% in 2018 (Combined rate from 38.9 to 25.7%).”

The budget should encourage domestic manufacturing focusing on imports substitution as well, FIEO added.

On Customs front, the instances of inverted duty structure needs to be looked into. More importantly, the end-use exemption for the domestic industry on inputs required for manufacturing of products imported through FTAs route should be given forthwith to push domestic manufacturing and imports substitution, said Exporters body.

The budget should look into reducing customs duty on capital goods which are not produced in the country so as to do justice with both entrepreneurs as well as domestic capital goods industry, another recommendation FIEO made.

On employment generation, FIEO pointed that the creation of employment is the biggest challenge faced by the country. If we have to reap demographic dividends, we have to provide jobs to millions who are seeking the same on month-on-month basis.

It stated “We would urge the Government to provide income tax relief to units which provide additional employment in export sector. Such a Scheme will also help the workers to move from informal employment to formal employment, which is a priority of the Government.”

Incentives may be provided based on twin criteria of incremental growth in exports and incremental growth in workers so that while on the one hand exports is increased, on the other, the employment intensive units also get a boost, it added.

Other option is to provide investment linked tax deductions so that units are encouraged to go for expansion helping exports and job creation.

It suggested that the Department of Commerce should be given enough budget allocation to support exports including agriculture exports which has come in focus only Anchorrecently.

Exporters body said “To encourage companies to invest in exports marketing for expanding exports as well as better unit realization, the budget should provide 150% weighted deductions on the expenditure incurred on exports marketing. Singapore has a “Market Readiness Assistance” (MRA) grant for companies with less than S$ 100 million annually for marketing related expenses. The MRA grant offers funding equal to 70% of the cost on such activities to encourage companies to go for overseas marketing/exports.”