Ludhiana Industry presses panic button over tensions in West Asia, seeks assistance
According to the CICU, the hostilities have significantly affected key global trade arteries
The Chamber of Industrial and Commercial Undertakings (CICU) on Monday raised a alarm over the deteriorating condition in the West Asia and its impact on India’s export-oriented industrial clusters, particularly the textile, engineering and allied sectors that are driven by the Micro, Small and Medium Enterprises (MSME) sector.
In a representation to the ministries of finance, commerce and industry, and textiles, the CICU sought exemption Section 43B (h) of the Income Tax Act for exporters targeting West Asian markets. It cited “exceptional disruptions to shipping, logistics and payment cycles” triggered by the conflict as the reason behind the demand.
According to the CICU, the hostilities have significantly affected key global trade arteries, such as the Strait of Hormuz — a vital choke point for about 20 per cent of the world’s crude and energy shipments.
Industry bodies said port operations at major hubs in Gulf nations, including Jebel Ali — a critical distribution centre for Indian garments, yarns and auto components — were facing unprecedented delays and congestion. With maritime traffic under threat and insurers hiking premiums over war risks, the traditional 45-day payment cycles between exporters and domestic suppliers have become untenable, the industry bodies added.
“The disruption of maritime routes and uncertainty in logistics makes it impossible to adhere to the mandate for payment to domestic MSME suppliers within 45 days, especially when export realisation itself can extend up to 15 months,” said Upkar Singh Ahuja, president, CICU.
“We urge the Centre to align domestic payment requirements with export realisation timelines and to grant permanent exemption from Section 43B (h) for exporters affected by this crisis,” he added.
Under Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) regulations, exporters are allowed up to 15 months to realise export proceeds. In stark contrast, Section 43B (h) of the IT Act treats supplier payments made after 45 days as non-deductible, effectively penalising exporters stranded by global disruptions beyond their control.
“This contradiction between tax law and foreign exchange regulations creates a severe liquidity gap for exporters,” Ahuja said.
CICU’s representation was backed by a detailed presentation submitted to the ministries and senior policy departments, including the Directorate General of Foreign Trade.
