Budget 2020

NIRVIK scheme for export credit insurance to be implemented this year

Amiti Sen New Delhi | Updated on February 01, 2020 Published on February 01, 2020

Scheme for refunding duties, taxes to exporters, too, to be brought out

Exporters have been assured that the new export credit insurance scheme, NIRVIK (Niryat Rin Vikas Yojana), offering lower premiums, higher insurance cover and faster claim settlement, will be implemented in FY2020-21.

Another scheme, for reimbursing some input duties to exporters, that was initially to be implemented from January 1, 2019, will now be announced some time this year, said Finance Minister Nirmala Sitharaman in the Budget, but she didn’tspecify an exact date for the same.

Export hubs

The FM said institutional mechanisms are being created for developing each district as an export hub, and proposed an allocation of ₹27,300 crore for industry and commerce in 2020-21.

While significant sops have not been announced to boost exports, which saw a dip of about 2 per cent in the April-December period this fiscal, the government has also taken care not to take any action that could hurt the sentiments.

To encourage entrepreneurship, the setting up of an investment clearance cell was announced, under which individuals will be offered assistance in funding; a portal will also be set up for the purpose.

“The government wants to continue with existing popular export schemes that are no more compliant with global trade norms, like the MEIS (Merchandise Exports from India Scheme) and EPCG (Export Promotion Capital Goods) Scheme), for some more time for certain sectors like electronics. By not specifying a date for the new scheme, the government has the freedom to implement it with some amount of flexibility,” a Delhi-based exporter told BusinessLine.

India is engaged in a dispute with the US at the World Trade Organization over some of its export schemes, as Washington has complained that New Delhi was continuing with incentives despite the multilateral body disallowing them.

Sitharaman said a scheme for reversion of duties and taxes on exported products will be launched this year. “It is proposed to digitally refund to exporters, duties and taxes levied at the Central, State and local levels, such as electricity duties and VAT, on fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism.”

While the scheme will be rolled out during the next financial year, the fixation of rates for a large number of products would require elaborate institutional mechanism, pointed out Sharad Kumar Saraf, president, Federation of Indian Export Organisations (FIEO). “However, the scheme would be compatible with the WTO norms and thus can sustain exports on a long-term basis.”

NIRVIK

The NIRVIK scheme, first announced by the FM in September 2019, seeks to provide an insurance cover guarantee of up to 90 per cent of the principal and interest, and include both pre- and post-shipment credit.

The premium for the coverage will also get reduced, thereby benefiting MSME exporters, FIEO said.

“This, in turn, is expected to enhance accessibility and affordability of credit to exporters and reduce liquidity requirement. Looking into the rising uncertainties and (economic) slowdown, the scheme is most timely, as credit defaults are set to rise in such challenging times,” Saraf said.

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Published on February 01, 2020
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