With an aim to boost dwindling outward shipments, the government has relaxed Priority Sector Lending (PSL) norms to provide additional export credit of up to Rs 68,000 crore and announced a Rs 50,000 crore scheme to reimburse taxes and duties paid by exporters. In addition, it said the insurance cover under the Export Credit Insurance Scheme (ECIS) has been enhanced, which will provide banks more comfort to give loans to exporters, especially those in the MSME sector. The expanded ECIS will offer higher insurance cover to banks lending working capital for exports, and premium incidence for MSMEs will be moderated suitably. The government expects the initiative to cost about Rs 1,700 crore per annum.
Finance Minister Nirmala Sitharaman has said exporters need handholding and the steps will give them additional advantage at a time when the rupee has depreciated against the US dollar. She said scheme for Remission of Duties or Taxes on Export Product (RoDTEP) will replace MEIS (Merchandise Exports from India Scheme) and expanded to all segments in addition to textiles. The RoDTEP scheme will be implemented from January 01, 2020.
Textiles and all other sectors which currently enjoy incentives up to 2% over MEIS will transit into RoDTEP from January 01. She added that in effect, RoDTEP will more than adequately incentivise exporters than existing schemes put together. The move assumes significance as MEIS was not in compliance with global trade rules. The US has already filed a complaint against this and similar other export promotion schemes being given by India in the WTO. Under the World Trade Organisation (WTO) rules, certain duties like state taxes on power, oil, water, and education cess are allowed to be refunded.
Sitharaman has announced another important measure so that exporters can exploit duty benefits under free trade agreements (FTAs) India has entered into with different countries. For the purpose, FTA Utilisation Mission, headed by a senior officer in the Department of Commerce, will be set up. The government also said there would effective monitoring of export financing by the Department of Commerce, and a fully automated electronic refund route will be set up for input tax credit (ITC) in GST to help exporters.
