The Federation of Indian Export Organisations has called on the government to address cost competitiveness challenges faced by exporters in the upcoming Union Budget 2026. The organization has suggested measures such as customs duty rationalization and enhanced tax incentives to support the export sector. It emphasized the need for targeted fiscal support and policy stability to enhance India’s global manufacturing competitiveness and promote export-driven growth.
FIEO President S C Ralhan highlighted the issue of inverted customs duty structures, where import duties on raw materials are higher than those on finished goods. This disparity negatively affects the cost competitiveness of Indian exporters and ties up working capital through accumulated input tax credits. The textile and apparel value chain, for example, is adversely impacted by higher customs duties on synthetic yarns and fibers compared to finished fabrics and garments.
The industry body recommended the rationalization and reduction of import duties on essential inputs used by export-oriented industries to align input costs with finished product duties. Ralhan also proposed targeted policy and fiscal backing to develop large-scale Indian shipping lines, aiming to save billions annually in freight costs through a robust domestic shipping network. Additionally, FIEO urged the government to reinstate the weighted tax deduction for in-house R&D expenditure and extend eligibility to various business structures.
FIEO’s proposals included a 200% tax deduction for overseas marketing expenses to benefit MSME exporters and an extension of the concessional corporate tax rate for new domestic manufacturing units. The organization emphasized the importance of these measures in enhancing export competitiveness and fostering a conducive environment for the growth of Indian exports.
