With the Union Budget around the corner, export bodies have urged the government to step up policy and fiscal support to strengthen India’s shipping and manufacturing ecosystem, warning that heavy reliance on foreign carriers is costing the economy billions of dollars annually.
The Federation of Indian Export Organisations (FIEO) has called for measures to develop global-scale Indian shipping lines, saying this could save India $40–50 billion every year in freight outflows. At present, nearly 91% of India’s export-import cargo is transported by foreign vessels.
“India’s heavy dependence on foreign shipping lines exposes exporters to high freight costs, supply disruptions and volatility in global shipping rates. The absence of strong Indian carriers weakens India’s trade resilience and bargaining power,” FIEO president S C Ralhan said.
According to FIEO estimates, India pays about $110–115 billion annually in freight charges to foreign shipping lines, of which $50–55 billion relates to exports alone. While welcoming the Union Cabinet’s approval of a ₹69,725 crore package to revitalise the maritime sector — including shipbuilding assistance — FIEO said additional support is needed. Its recommendations include access to long-term finance, viability gap funding and supportive regulatory measures.
In its pre-Budget memorandum, FIEO also flagged the persistent issue of inverted duty structures across key export sectors such as textiles, electronics, chemicals, plastics, leather and footwear. In many cases, import duties on raw materials and components are higher than those on finished products, raising production costs and hurting competitiveness.
FIEO pointed out that synthetic yarns and fibres attract higher customs duties than finished garments, while electronic components like PCBs, connectors and sub-assemblies face higher duties than imported finished electronics. Similar anomalies exist in chemicals, plastics and leather products.
“Correcting these anomalies by lowering or restructuring duties on raw materials will reduce production costs, ease working capital pressures, encourage domestic manufacturing and strengthen India’s export competitiveness,” Ralhan said.
The body has also sought a 200% tax deduction for overseas marketing and branding expenditure — including trade fairs, buyer meets and promotional activities — with a focus on MSME exporters. In addition, it has proposed extending the 15% concessional corporate tax rate for new domestic manufacturing units for at least five more years beyond the earlier cut-off date of March 31, 2024.
Echoing concerns around MSMEs, the Engineering Export Promotion Council (EEPC) has recommended reducing income tax for all non-corporate manufacturing MSMEs to 25% and releasing 90% of GST refunds immediately.
Currently, non-corporate manufacturing MSMEs pay close to 33% tax, including surcharge and cess, putting them at an 8–9 percentage point disadvantage compared with corporates, EEPC chairman Pankaj Chadha said.
Industry bodies say these measures are critical to improving cost competitiveness, easing liquidity stress and boosting India’s export growth amid global uncertainties.
