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Ending uncertainty for exporters, the government has announced a new scheme for reimbursing input duties and taxes to replace the popular Merchandise Export Incentive Scheme (MEIS) which is not compliant with world trade rules.
Some exporters, however, are awaiting more details on the new scheme, called the Remission of Duties or Taxes on Export Promotion (RoDTEP) scheme, as they are unsure if it would offer them higher incentives than what they are getting at present.
Most export sectors, such as garments and textiles, leather and engineering goods have been demanding higher sops to combat a fall in exports in the on-going fiscal.
New schemes
Finance Minister Nirmala Sitharaman announced a number of other measures to boost dipping exports including early extension of priority sector lending (PSL) norms for export credit, a fully automated electronic refund route for Input Tax Credits (ITC) in GST and reducing the turn around time for exports at ports and airports.
The new export incentive scheme will “more than adequately” incentivise exporters as compared with all existing schemes put together, and it will be implemented from January 1 2020, Sitharaman said at a press conference today. The revenue foregone for the new scheme is estimated at up to Rs 50,000 crore per annum.
While some exporters are optimistic about the new scheme, others are sceptical. “The new scheme looks attractive as it will neutralise all duties and levies suffered by export products,” Sharad Saraf, President, Fieo, expressed hopes. Giving three months lead time till December 31 to the existing MEIS will remove the uncertainty creeping in the minds of the exporters and will greatly help to finalise their export orders, he added.
“On the face of it, this just seems to be a replacement of MEIS and other existing export benefits. The most critical issue issue will be how the RoDTEP will be calculated,” Sanjay Jain from the Confederation of Indian Textiles Industries (CITI), pointed out.
Most exporters, however, are positive about the announcement that PSL norms for export credit have been examined and enabling guidelines are under consideration of the RBI, which will release an additional Rs. 36,000 cr to Rs 68,000 cr as export credit under priority sector.
Exporters enthused
The promise of bringing down the turnaround time for shipments at Indian ports and airports and make them comparable to the very best existing in places such as Shanghai and Boston, has also enthused exporters.
“Committing more credit to exporters, bringing down the turnaround time at the ports at par with global standards and making the tax rebate schemes WTO-compliant with particular focus on labour-intensive sectors like textile and handicraft would lift the sentiment in the export sector,” said ASSOCHAM president BK Goenka.
Saraf expressed hopes that expanding the scope of Export Credit Insurance Scheme (ESIC) by ECGC will enable reduction in overall cost of export credit including interest rates especially for MSMEs.
India’s exports contracted by 6 per cent in August 2019 to $26.13 billion with major sectors including gems and jewellery, petroleum, ready-made garments and engineering goods posting a fall. The overall exports in the April-August 2019-20 period is also lower by 1.54 per cent to $133 billion.
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