Tax sops top SME engineering units’ demand list

After battling with lower overseas sales and poor margins for more than a year, SME exporters of engineering goods are finally resorting to the government for support. The wait for recovery still seems far from over, thereby encouraging the small engineering export segment to strongly pitch for tax sops and simplification of export documentation processes and regulations.

The Engineering Export Promotion Council of India (EEPC India), a representative body of engineering exporters, has submitted a pre-Budget memorandum to the Ministry of Finance, demanding incentives to help SME units recover their losses and make fresh investments in the coming year.

Demands

The considerable plunge witnessed in engineering export figures over the last 1 year and the slim chances of a turnaround in the next 1-2 years have necessitated SME engineering exporters to demand tax exemption on incremental exports for 3 years, with the base year being 2008-09. They have also asked for a weighted deduction of 1.5 times on the expenses incurred on overseas establishments and R&D for 3 years.

'Meeting these demands will enhance the competitiveness of SMEs, enabling them to expand their reach and export higher-graded engineering goods,' said GP Singh, proprietor of Dharamveer Engineering, a small-sized pump manufacturing unit in Vadodara.

EEPC India has also called for pushing up the general rate of depreciation on plant and machinery from 15% to 25%. It pitched for extension of 100% depreciation on investments for replacement of obsolete technology in conformity with new global environmental standards.

'Raising the general rate of depreciation on plant and machinery is expected to encourage MSMEs to undertake fresh investments and propel demand for capital goods in the country,' said S Banerjee, director of UMP Engineering, a small-sized engineering firm in Kolkata.

Industry associations have also demanded hike in the import duty for capital goods and reduction in the import duty for raw materials to offer a competitive edge to domestic SME engineering exporters against their global counterparts. Simplification of tax procedures has been sought for exporters to ease their financial burden.

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