Why in news?
The Engineering Export Promotion Council of India (EEPC India) urged the government to cut the income tax rate for non‑corporate manufacturing micro, small and medium enterprises (MSMEs) to 25 percent and to release 90 percent of their pending GST refunds immediately. It said that parity with private limited companies and quicker tax refunds are essential to keep smaller engineering exporters competitive amid rising tariffs abroad and new carbon taxes.
Background
EEPC India is the apex trade and investment promotion organisation for the engineering sector. Set up in 1955, it acts as an interface between engineering exporters and the Indian government. Its membership includes large conglomerates, state‑owned firms and thousands of small workshops across the country. EEPC India organises international trade fairs, buyer–seller meets and technology shows to help Indian companies integrate into global supply chains.
Demands raised by EEPC India
- Lower income tax for non‑corporate manufacturers: The council wants the tax rate on sole proprietorships and partnerships engaged in manufacturing to be reduced from 30 percent to 25 percent. This would align them with private limited companies and leave more resources for investment and job creation.
- Faster refund of GST credits: EEPC India asked for 90 percent of pending goods and services tax refunds to be released up front. Delayed refunds lock up working capital, making it harder for exporters to fulfil orders on time.
- Incentives for renewable energy: It proposed 100 percent depreciation on rooftop solar panels and other clean‑energy investments so that small factories can cut energy costs and meet global green standards.
- Assistance against external trade barriers: The council highlighted the impact of higher import duties in the United States and forthcoming European carbon border taxes. It asked the government to negotiate fair access and to offer support when Indian firms face unexpected costs.
Significance
- Supporting MSME exporters: Lower taxes and quick GST refunds improve cash flow for small engineering units, helping them invest in technology and retain workers.
- Level playing field: Aligning tax rates for different business structures ensures that sole proprietors and partnerships are not disadvantaged compared to private limited companies.
- Encouraging green manufacturing: Incentives for solar panels and other renewable technologies can reduce production costs and help firms meet the environmental standards demanded by buyers overseas.
- Preserving competitiveness: Timely government support helps Indian exporters face global trade headwinds such as higher tariffs and new environmental levies.
Conclusion
EEPC India’s proposals aim to strengthen the backbone of India’s engineering exports by easing tax burdens and improving liquidity. Responsive policies can help small manufacturers expand their presence in international markets while adopting greener practices.
Source: TH
