NewKerala.com

FIEO Demands Budget 2026 Fixes for Exporters' Cost Woes, Tax Breaks

The Federation of Indian Export Organisations has presented a five-point proposal for the Union Budget 2026 to tackle cost competitiveness challenges for exporters. It calls for urgent rationalisation of inverted customs duty structures that increase input costs for industries like textiles. Key recommendations include policy support for developing Indian global shipping lines to save billions in freight costs and restoring enhanced tax deductions for R&D and overseas marketing. The body argues these targeted fiscal measures are essential for India to attract global manufacturing and sustain export-led growth.

Key Points: FIEO Budget 2026 Wishlist: Duty Cuts, Shipping, Tax Breaks

  • Fix inverted customs duties
  • Develop Indian shipping lines
  • Restore R&D tax deductions
  • Extend concessional corporate tax rate
  • Support overseas marketing for MSMEs
2 min read

FIEO urges govt to tackle exporters' cost competitiveness issues in Budget 2026

FIEO urges Budget 2026 to fix inverted customs duties, boost shipping, and restore R&D tax breaks to improve exporters' global competitiveness.

"The Budget should urgently address the problem of inverted customs duty structures - S C Ralhan, FIEO"

New Delhi, Jan 22

Federation of Indian Export Organisations on Thursday urged the government to use the Union Budget 2026 to tackle cost competitiveness issues faced by exporters through customs duty rationalisation and tax incentives.

FIEO proposed five measures ranging from customs duty rationalisation to support for domestic shipping lines and enhanced tax incentives for R&D.

The industry body argued targeted fiscal support and policy certainty are essential as India competes for global manufacturing relocation and seeks to deepen export‑led growth.

"The Budget should urgently address the problem of inverted customs duty structures, where import duties on raw materials, components, or intermediates are higher than those on finished goods," said S C Ralhan, President, FIEO.

"An inverted duty structure significantly erodes the cost competitiveness of Indian exporters and locks up scarce working capital through accumulated input tax credits," he added.

For instance, the synthetic yarns and fibres attract higher customs duties than finished fabrics and garments, adversely impacting the textile and apparel value chain, the industry body said.

FIEO recommended rationalisation and reduction of import duties on key inputs used by export-oriented industries so that input costs are aligned with finished product duties.

Ralhan proposed targeted policy and fiscal support to develop Indian global‑scale shipping lines, including access to long-term finance, viability gap funding, and supportive regulatory measures.

The industry body estimated India to save $40-50 billion annually in freight outflows through a robust domestic shipping ecosystem.

FIEO called on the government to restore the 200-250 per cent weighted tax deduction for in‑house R&D expenditure under Section 35(2AB) and to extend eligibility to LLPs, partnerships and proprietorships.

The release mentioned a proposal for a 200 per cent tax deduction for expenditure incurred on overseas marketing, branding, trade fairs, buyer meets, and promotional activities, particularly benefiting MSME exporters.

It also proposed extending the 15 per cent concessional corporate tax rate under Section 115BAB for new domestic manufacturing units for at least another five years beyond the earlier cut-off date of 31 March, 2024.

- IANS

Share this article:

Reader Comments

P
Priyanka N
The shipping line proposal is brilliant. We pay a fortune in freight to foreign companies. If we can develop our own shipping ecosystem and save $40-50 billion, that's money that stays in India and creates jobs here. Aatmanirbhar Bharat should mean this too.
A
Aman W
Good points, but the government also needs to look at infrastructure. Our ports still have delays and high handling costs. Duty rationalisation is one thing, but if goods are stuck at Chennai or Mundra port, competitiveness is lost anyway.
S
Sarah B
The tax deduction for overseas marketing is a game-changer for small businesses. As someone who exports handicrafts, attending international fairs is so expensive. This kind of support would really help us build our brand globally. Fingers crossed for the budget!
K
Karthik V
While I support most proposals, the extended corporate tax cut needs scrutiny. Are we just giving more benefits to large corporations without ensuring they actually boost exports or manufacturing? Policy should have strict job creation and export targets attached.
M
Meera T
R&D incentives are crucial for moving up the value chain. We can't just be an assembly hub. To become a true manufacturing powerhouse, we need to innovate. Restoring the 200-250% deduction will encourage companies to invest in developing their own technology.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50