Steps needed to boost small units' exports: FISME

Says Advance Licence route is not workable in the case of MSMEs, while the Duty Drawback scheme is too cumbersome and time-consuming for them to claim refunds

The phasing out of the Duty Entitlement Pass Book (DEPB) scheme has hurt exporters' ability to compete, according to the Federation of Indian Micro and Small & Medium Enterprises (FISME), in a submission made to the inter-ministerial committee on 'Accelerating Manufacturing in MSME Sector' as well as to the Union finance secretary.

FISME said the Advance Licence route is not workable in the case of MSMEs, while the Duty Drawback scheme is too cumbersome and time-consuming for them to claim refunds. There is an urgent need to find a suitable replacement for DEPB, the federation said, adding that all countries have tax reimbursement schemes for exports.

It has proposed a Duty Credit Advance Licence, which is similar to the Advance Licence, with both the quantity of imports and import duty element mentioned. In the proposed scheme, an exporter would be entitled to import any item duty free equivalent to the total duty element. It could also be made transferable, and would be more transparent than DEPB, FISME said.

The northern region states -- housing export clusters of engineering and auto components, leather, textiles and garments, handicrafts and furnishings - suffer as a result of high inland haulage tariffs charged by the Container Corporation of India (Concor), FISME said. A regulator was, therefore, needed to fix competitive and fair freight charges.

Though Indian pharma companies have huge potential to make inroads in foreign markets, high registration costs are a big deterrent for smaller companies. Support for registration charges would reduce the cost of exploring new markets, FISME said.

It said MSMEs needed a structured export support programme, to broaden the exporter base. Export-capable MSMEs that are not exporting in targeted sectors, such as engineering, chemicals, pharmaceuticals, textiles and leather, need to be identified.