Engineering Industry Appeals For Interest Subvention As Exporters Face Rising Credit Costs

(MENAFN- KNN India) New Delhi, Jul 9 (KNN) The Engineering Export Promotion Council (EEPC India) has called on the government to reinstate the interest subvention scheme for exporters in its pre-budget recommendations.

This appeal comes at a crucial time when rising interest rates are putting pressure on the industry.

EEPC India Chairman Arun Kumar Garodia underscored the scheme's importance, proposing a restoration of the three percent subvention rate for specific tariff lines and a five percent rate for MSME exporters across all product categories.

The organisation, which represents nearly 9,500 member companies-over 60 per cent of which are MSMEs-emphasised the engineering industry's significant contribution to India's economy, accounting for 25 per cent of total exports and serving as the highest foreign exchange earner.

A key point of contention is the recent exclusion of merchant exporters from the Interest Equalisation Scheme (IES). EEPC India argued that these exporters, who operate on low profit margins, are particularly vulnerable to credit costs. They proposed extending IES benefits to merchant exporters with a three percent subvention rate.

The government's recent notice extending the IES for two months, but only for MSMEs, has left merchants and large exporters ineligible after June 30. This exclusion, warns EEPC India, could adversely affect businesses, especially those in competitive sectors.

EEPC India's recommendations also include reinstating a 150 per cent weighted deduction for R&D expenses. This measure aims to encourage innovation and technological advancements in the engineering sector, which could enhance India's competitiveness in global markets.

Another key proposal is offering 100 per cent depreciation for MSME investments in solar power generation. This recommendation aligns with India's push towards sustainable energy and could help reduce operational costs for small and medium-sized enterprises in the long run.

The organisation has also suggested implementing a 25 per cent income tax slab for MSME manufacturing units, with reinvestment conditions. This tax incentive could stimulate growth and expansion in the MSME sector, which forms a crucial part of India's export ecosystem.

As India seeks to strengthen its position in the global export market, the government's response to these recommendations could play a crucial role in shaping the future of the country's export-oriented industries, particularly in the engineering sector.

(KNN Bureau)

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