Business EconomyPosted at: Jan 24 2026 12:53AM


FIEO urges Govt to address cost pressures, shipping gaps and R&D incentives in union Budget

Hyderabad/New Delhi, Jan 23 (UNI) The Federation of Indian Export Organisations (FIEO) on Friday called on the government to take urgent measures in the union Budget 2026 to enhance the cost competitiveness of Indian exporters, strengthen logistics resilience and boost innovation-led growth.
In a statement, FIEO President S C Ralhan said the Budget must address the long-standing issue of inverted customs duty structures, where import duties on raw materials and components are higher than those on finished goods.
Such anomalies, he noted, erode exporters’ competitiveness and lock up working capital. Sectors such as textiles, electronics, chemicals, plastics, leather and footwear continue to face this challenge.
Rationalising and reducing duties on key inputs would lower production costs, encourage domestic value addition and strengthen India’s export performance.
Highlighting India’s dependence on foreign shipping lines, FIEO President also sought targeted policy and fiscal support for developing Indian global-scale shipping carriers.
According to the exporters’ body, a strong domestic shipping ecosystem could reduce freight volatility, improve supply chain reliability and potentially save the country USD 40–50 billion annually in freight outflows.
On the fiscal front, FIEO has recommended restoring the 200–250 per cent weighted tax deduction for in-house R&D expenditure under Section 35(2AB) of the Income Tax Act.
It has also urged the government to extend this benefit beyond companies to include LLPs, partnership firms and proprietorships, particularly MSMEs, which form the backbone of India’s export sector.
To improve India’s presence in global markets, the organisation has proposed a 200 per cent tax deduction for overseas marketing and branding expenditure, including participation in international trade fairs and buyer meets.
The FIEO Chief said higher marketing costs often discourage MSME exporters from exploring new markets, limiting India’s global visibility.
He also further sought an extension of the 15 per cent concessional corporate tax rate for new domestic manufacturing units under Section 115BAB for another five years beyond the earlier cut-off date of March 31, 2024.
FIEO said policy certainty on taxation is critical as India competes with other countries for global manufacturing investments and supply-chain relocation.
According to FIEO, these measures would collectively reduce costs, improve logistics efficiency, encourage innovation and investment, and support the government’s Make in India and export-led growth strategy.
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