Fuel Price Hike Will Add to Exporters Woes: FIEO, Fuel Price Hike Will Make Indian Exports Uncompetitive, Fuel Price Hike Will Impact on Indian Exports, Affects of Fuel Price Hikes on Indian Exports

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SME Times News Bureau | 30 Jun, 2010
Hike in fuel prices will make Indian exports uncompetitive as it would add to costs of exporting units, which have to be highly depend on diesel and other alternative fuels instead of electricity due to erratic power supply in industrial areas, said the Federation of Indian Export Organization on Tuesday.

"It would have an adverse impact on industry as erratic supply of electricity in the industrial areas makes exporting units more dependent on diesel /fuel and hence the measure to decontrol would result in escalation of input costs very significantly in turn making products less competitive for exports in the international markets," said FIEO President A. Sakthivel in a press release.

In such scenario, he urged, the government should allow CENVAT credit on the widely used in manufacturing fuel inputs like High Speed Diesel (HSD) and Light Diesel Oil (LDO), on which credit cannot be availed currently under the CENVAT credit Rules, 2004.

He pointed out that HSD and LDO is widely used in industry as fuel for the purpose of generation of electricity and the electricity so generated is in turn used in or in relation to manufacture of dutiable final product.

"Allowing CENVAT credit on such essential inputs will be a logical first step in this direction," said Sakthivel .

"Further, when CENVAT credit is allowed on fuels such as furnace oil, lubricants etc., it appears that there is no logic in excluding HSD/ LDO from the purview of 'Cenvatable' input," he added.

The FIEO chief said that exports are going through turbulent times with developed markets under depression/stagnation and the Indian Industry as such bears the brunt of high interest costs, logistics cost,etc. resulting in an inherent cost disability of around 18 percent.

FIEO Chief stated that in such circumstances where inflation is on a record high, government might consider offsetting of fuel costs forthwith under the duty drawback.