Industrial bodies in Ludhiana have urged the Union government to grant an immediate exemption from Section 43B(h) of the Income Tax Act, warning that escalating disruptions in West Asia are placing severe financial strain on exporters and manufacturing clusters.
The appeal has been led by the Chamber of Industrial & Commercial Undertakings (CICU), a Ludhiana-based industry body representing a wide range of micro, small and medium enterprises (MSMEs) across manufacturing, engineering and textile sectors.
Exporters across the region report mounting logistical challenges as the deteriorating situation in West Asia disrupts global shipping routes. Several consignments have been cancelled, insurance costs have risen sharply and vessels are increasingly being diverted through longer routes such as the Cape of Good Hope to avoid high-risk zones including the Red Sea and the Persian Gulf.
Upkar Singh Ahuja, President of CICU, stated that the situation had created a cascading impact on India’s export-oriented industrial clusters. He noted that the conflict had effectively choked the Strait of Hormuz, a critical global shipping route through which around 20 per cent of the world’s crude oil and energy supplies pass. He further pointed out that disruptions had affected key logistics hubs such as Jebel Ali, which functions as a major distribution centre for Indian garments, yarn and auto components.
In response to the crisis, CICU has submitted an urgent representation to the Ministries of Finance, Commerce and Industry, and Textiles, seeking policy relief for exporters.
Industry leaders have highlighted what they describe as a major policy contradiction affecting exporters. Under Section 43B(h) of the Income Tax Act, businesses are required to make payments to domestic MSME suppliers within 45 days. However, under the Foreign Exchange Management Act (FEMA), exporters are permitted up to 15 months to realise export proceeds.
Ahuja stated that prolonged shipping delays and extended payment cycles had rendered the 45-day payment requirement unviable under current conditions. He warned that the mismatch between export realisation timelines and domestic payment obligations was creating a severe liquidity gap for exporters.
According to him, MSME exporters were facing critical financial stress that could negatively affect production levels and employment in key manufacturing clusters.
The textile sector in Punjab, among others, is considered particularly vulnerable to the disruption. These MSME-driven clusters depend heavily on predictable shipping cycles and operate in highly price-sensitive global markets.
SC Ralhan, President of the Federation of Indian Export Organisations (FIEO), confirmed that the situation had already led to a significant number of order cancellations. He added that logistics costs had increased sharply as shipping routes were diverted and insurance premiums rose.
Ralhan also highlighted the personal challenges faced by exporters during the crisis. He stated that several exporters who had travelled to the Middle East on business were currently stranded due to the evolving situation and were running short of funds while awaiting further developments.
CICU General Secretary Honey Sethi stated that the survival of several industrial clusters depended on timely and pragmatic policy support from the government. He emphasised that responsive interventions would be essential to ensure that industrial growth and export activity remain stable despite international disruptions.
