CII asks Finance Ministry for fiscal support amid West Asia crisis

Industry body proposes credit support, tax relief and policy steps to shield MSMEs, exporters and energy-intensive sectors from disruptions caused by the ongoing West Asia crisis

A time-bound conflict-linked emergency credit line guarantee scheme, similar to the one during Covid, rationalisation of the tax and duty structure on energy inputs and extending delivery timelines for central and state public sector undertaking (PSU) contracts are some suggestions made to the finance ministry by the industry in light of the ongoing West Asia war.

 

The Confederation of Indian Industry (CII) has suggested a 20-point policy agenda to the government.

 

The industry body called for a fiscal, financial and trade response to the current geopolitical situation as micro, small and medium enterprises (MSMEs), exporters and energy-intensive industries continue to bear the brunt of the crisis.

   

“India’s experience during previous crises has shown that coordinated fiscal and monetary action can significantly strengthen resilience. The next phase of policy response may therefore need to focus on targeted liquidity support, credit facilitation, trade cost management and foreign exchange stability,” said Chandrajit Banerjee, director general, CII.

 

The industry chamber has recommended that additional collateral-free working capital be extended to affected enterprises through government-backed guarantees, particularly targeting MSMEs, exporters and gas-dependent sectors.

 

The CII suggested that the Reserve Bank of India (RBI) should consider a temporary and clearly defined three-month moratorium and restructuring window and a special refinance window for MSMEs. This is essential especially for exporters and ancillary units linked to export supply chains in light of the current situation.

 

It has also sought a temporary relief in electricity tariffs to help manage rising input costs during the disruption period and a temporary reduction or waiver of administrative banking charges, including loan processing fees, foreign exchange handling charges and documentation costs.

 

CII said the finance ministry could also consider a time-bound rationalisation of the tax and duty structure on energy inputs to mitigate cascading cost impacts of the disruption, including a temporary waiver of the 2.5 per cent Customs duty on liquefied natural gas (LNG) imports.

 

The Centre, on March 27, had announced a mega bonanza for oil companies, cutting additional excise duty on petrol and diesel by ₹10 per litre in order to protect the consumers from price rise.

 

The government reintroduced export duties on diesel and aviation turbine fuel (ATF) to ensure adequate availability of these fuels in the domestic market.

 

A duty of ₹21.5 per litre has been levied on diesel exports, while ATF exports will attract a duty of ₹29.5 per litre from nil.

 

On April 2, 2026, the finance ministry announced a full Customs duty exemption on critical petrochemical products in response to the West Asia situation.

 

The industry chamber suggested a special foreign exchange (forex) swap window for oil and gas public sector undertakings (PSUs).

 

This would enable them to meet their US dollar requirements in a manner that reduces volatility in the foreign exchange market and limits undue pressure on reserves.

 

“Over the medium term, a permanent conflict-linked export risk support facility may be established within the Export Credit Guarantee Corporation (ECGC), with predefined activation criteria and standardised support parameters to provide timely risk coverage during geopolitical disruptions,” the CII recommended.

 

The CII had earlier written to the MSME secretary to highlight significant disruptions in shipping and logistics operations due to the evolving geopolitical developments.

 

The industry chamber had stressed on several emerging concerns relating to logistics disruptions, rising freight and insurance costs, and working capital stress for MSMEs due to the West Asia crisis.

 

In its latest statement, the CII said the government should expand the Trade Receivables Discounting System (TReDS) platform more actively across affected industrial clusters.

 

This would facilitate invoice discounting, and settle pending goods and services tax (GST) refunds, duty drawback claims and Remission of Duties and Taxes on Exported Products (RoDTEP) dues on a fast-track basis. 

Demand list 

• CII proposes 20-point agenda covering fiscal, trade and liquidity measures
• MSMEs, exporters and energy-intensive sectors face rising costs and disruptions
• Call for collateral-free working capital support backed by government guarantees
• RBI urged to allow temporary moratorium and restructuring for stressed firms
• Demand for tax, duty rationalisation on energy inputs, including LNG
• Faster GST refunds and expanded TReDS to ease liquidity pressures