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.
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