The Associated Chambers of Commerce and Industry of India has suggested that India should lower the tariff rate to 15 per cent in the span of 2-3 years as China and other ASEAN countries have more competitive rates.
Advocating a progressive Exim Policy for promoting exports, Assocham said priority areas like employment generation, promotion of farm, rural and manufacturing sectors should be given more focus.
In a note submitted to the industry and commerce ministry, Assocham president MK Sanghi said the hardening of the rupee against the dollar, low export margins, inadequate schemes for exploring newer markets, fickle policies on export incentives are few handicaps being faced by industry, especially small and medium enterprises.
Apart from reducing the import duty, the chamber also said the government should work on enhancing exports to the ASEAN.
There are a number of exporting units in the domestic tariff area that are almost 100 per cent exporters but not treated on a par with export oriented units and thus do not enjoy the benefits of Income-Tax exemption and refund of Central Sales Tax.
Sanghi suggested the ambit of EOU scheme should be expanded to cover all domestic units exporting over 75 per cent of their production and such units may be recognised as extended export-oriented units.
The duty neutralisation scheme was necessary because of the high rates of taxes and the complex taxation structure in the country, Sanghi said.
To maintain the momentum gained on Indian exports, it is essential that the Duty Entitlement Pass Book scheme be continued at least till states introduce value added tax.
The government should consider extending benefits under the Income-Tax Act to deemed exports so that they can be treated on a par with physical exports.
This would help save the outflow of precious foreign exchange from the country and enthuse domestic industry, Sanghi said.
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