According to a report in Economic Times, As skyrocketing prices of primary raw materials have been hurting the industry, especially MSMEs, the government should consider including iron and steel products in the RoDTEP scheme to make exports more competitive, said EEPC India chairman Mahesh Desai.
He has also proposed reduction in customs duty on copper ores and concentrates from 2.5% to nil as part of the recommendations to the Budget 2022-23.
Desai said that manufacturer exporters have seen their profit margins getting thinner and thinner due to high raw material prices and a surge in ocean freight cost for the last almost one year.
Iron and Steel Products
“The manufacturers of the iron and steel products are finding it difficult to sustain their businesses. In spite of these price challenges they have been trying hard to survive as the majority of segments in this sector operates on minuscule margins and is in dire need of support from the government. It is therefore requested to extend the benefits of the RoDTEP scheme to the sector equivalent to existing ones under the MEIS scheme,” the report said.
On the rationale for cutting down custom duty on copper ore, the EEPC chairman said that sufficient availability of the ores at the competitive price would ensure reasonable prices of primary products in the domestic market.
“This will give good impetus to the manufacturing of downstream products ultimately resulting in the growth of exports of the downstream value-added products,” the report said.
He noted that due to limited copper ore reserves, Indian copper industry depends on imports of copper concentrate which are majorly imported from Chile and Indonesia, enjoying nil duty under India-Chile PTA and India-ASEAN FTA respectively.
Manufacturing of Refrigerator
“A higher duty rate compels import of copper ores and concentrates through preferential route whereas if the duty be reduced to zero, Indian industry will be able to explore options other than Chile and Indonesia for sourcing copper concentrate and get away with high market concentration”, the report said.
He stated that given the higher targets set for overall exports and also engineering goods the industry needs to make capital investment in time to come and expand capacity.
The share of engineering in total merchandise export was 26.89% in November 2021 as against 26.37% in October 2021, 26.65% in September 2021 and 27.68% in August 2021.
“As the margin is shrinking, making an investment for capacity expansion is becoming increasingly difficult”, the report said.
Among other suggestions pertaining to indirect taxes, Desai has proposed custom duty exemption for goods used in the manufacturing of refrigerator compressors such as air or vacuum pumps, air or other gas compressors and fans.
“In our view the exemption can be withdrawn as this will help in giving an incentive for domestic parts for use in refrigerator compressors. The move should result in a revenue surplus for the government,” the report said. (Economic Times)
