Trade Promotion Council of India (TPCI) in its budget recommendation has said that the government should incentivise the exporters whose "geographical diversification is more, and not concentrated in terms of outreach and extension product and country wise".
It also sought incentives for thrust sectors like furniture and electricals, where India has a huge competitive advantage in exports.
TPCI, in a statement said that the government should permanently exempt goods procurement under certain export promotion schemes from the Integrated Goods and Service Tax (IGST) and compensation cess. Currently the exemption exists till March 31, 2020.
Emphasising on the need of research and development (R&D) in the economy, the trade associations said that innovation should be encouraged by the government.
According to the Engineering Exports Promotion Council (EEPC) of India, the budget should do away with any duty on imports made for R&D in the country.
"Research & Development is the backbone for sustained growth of any industry. This will help to develop new products, and compete with other international players.
"Currently, any import for R&D is subject to payment 5 per cent duty with lot a paper work and approvals. This actually hampers the R&D of any Organization," EEPC said in its budget recommendations.
It suggested that there should be no import duty for R&D purposes so that more and more investment can take place in this sector.
"For availing zero duty, conditions like DSIR certification, R&D with minimum staff of 30 personnel, grant of minimum five patents, etc. can be put," it said.
The Federation of Indian Export Organisations (FIEO) also urged a review of the Section 35 (2AB) of Income Tax Act to provide tax deduction not only on R&D but also on product development.
"The tax deduction on R&D expenditure which has come down from 200 per cent to 100 per cent now may be restored to its original position as R&D investment in India is extremely low (1 per cent of GDP) and most of the R&D is being done at the behest of the Government or in sectors like pharma," FIEO said.
EEPC India also sought income tax exemption on the profits derived on transfer of incentive scrips like Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) allowed under foreign trade policy.
EEPC further urged the government increase the basic customs duty (BCD) on substances, including soda ash, carbon black, fertilizer and petrochemicals to a minimum of 15 per cent.
"Our members have supplied these equipment to major producers in India. It has been observed that the price of these equipment from China is quite lower than that offered by Indian manufacturers to the extent that the selling price of Chinese equipment is even less than the Indian manufacturing cost.
The Chinese companies are appointing business agents in India to exploit Indian market for their equipment," it said.
It further observed that although raw material imports from China attract safeguard and anti-dumping duties, the import duty on the finished equipment is less.
Indian equipment manufacturers compete with Chinese manufacturers who have low or no anti-dumping duty on their final equipment sold to Indian customers which make products of Indian equipment manufacturers unviable in the domestic market against Chinese equipment manufacturers, it said.
( With inputs from IANS )