A possible commerce battle between america (US) and China below the Donald Trump presidency might create a further $25-billion export alternative within the US for Indian exporters, the Federation of Indian Export Organisations (FIEO) mentioned on Thursday throughout a pre-Funds session on the Finance Ministry with FM Nirmala Sitharaman and authorities officers.
India’s apex commerce physique highlighted the necessity for focused measures to grab this chance. These embrace a advertising and marketing scheme with a corpus of Rs 750 crore unfold over three years, the continuation of the Curiosity Equalisation Scheme (IES), and enhanced tax deductions of 200 to 250 per cent for R&D spending below Part 35(2AB) of the Earnings-Tax Act.
FIEO recognized the biggest potential acquire of $10 billion within the shopper electronics sector, the place US corporations are transferring away from reliance on Chinese language parts as a consequence of safety and commerce considerations. India, already a distinguished participant in cell phone meeting, stands to profit considerably as world manufacturers more and more outsource manufacturing to the nation, exporters mentioned.
Different sectors with substantial alternatives embrace textiles and clothes, toys and video games, chemical substances, footwear, and furnishings, every representing a $1 billion export potential. The automotive parts sector might see a further $1.5 billion in exports, exporters informed the Finance Ministry.
Exporters’ physique flags elevated prices
FIEO additionally emphasised that rising enter and freight prices have elevated the burden on exporters, that now require prolonged credit score intervals to satisfy consumers’ fee timelines. IES has been a key software in mitigating these challenges. This comes amid continued assaults within the Purple Sea area, forcing world transport strains to take longer routes.
Union Minister for Finance & Company Affairs Smt. @nsitharaman chairs the fourth Pre-Funds Session with the stakeholders and specialists from export, commerce and business sectors in reference to the upcoming Union Funds 2025-26, in New Delhi, at the moment.
The assembly was additionally… pic.twitter.com/5PcWlWodwg
— Ministry of Finance (@FinMinIndia) December 26, 2024
“The IES has supplied a degree enjoying area for exporters, enabling them to compete with world counterparts. Between 2015 and 2024, India’s exports below IES grew at a compound annual development charge (CAGR) of 6.6 per cent, in comparison with world merchandise commerce development of 4.4 per cent. Extending IES would additional bolster exports in essential sectors akin to textiles, leather-based, chemical substances, and engineering items,” FIEO mentioned.
The IES is presently solely out there until December 31, 2024, and for producers in micro, small and medium enterprises (MSMEs) with an annual cap of Rs 50 lakh per importer-exporter code (IEC) holder, which is inadequate for a lot of MSMEs, FIEO mentioned.
Purple sea disruption flagged
The commerce physique additionally identified that China, India’s main competitor, provides in depth subsidies and low-interest financing to its exporters, giving them an unfair benefit in world markets. Moreover, regional rivals like Vietnam, Thailand, and Indonesia profit from beneficial trade charges and decrease financing prices. FIEO warned that with out extending IES, “India dangers dropping market share” to those rising gamers.
Exporters additionally raised considerations about disruptions within the Purple Sea area, noting that the majority of India’s worldwide commerce depends on overseas transport strains. MSME exporters, specifically, stay weak to excessive freight expenses and provide chain disruptions.
“We remit over $100 billion yearly in transport service expenses, with transport freight being a major factor. We welcome the Transport Company of India’s transfer to amass extra fleets however urge the federal government to infuse extra fairness into it or encourage non-public sector participation. Constructing a sturdy home transport line will guarantee higher resilience in our commerce logistics,” FIEO mentioned.
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