- Date : 19/09/2019
- Read: 4 mins
All you need to know about the recent announcements made by the Finance Minister aimed to boost the export sector.
With the economic slowdown refusing to fade away, the government’s recent announcements to provide benefits to certain key sectors of the industry didn’t come as a surprise. The Finance Minister Nirmala Sitharaman declared a host of measures aimed to increase India’s export and reverse the stagnating economic conditions.
Let's look at these benefits and try to understand how they can benefit the export sector:
- A new Remission of Duties or Taxes on Export Products (RoDTEP) will be introduced, which will be based on and replace the Merchandise Exports from India Scheme (MEIS). The existing MEIS or Rebate of State and Central Taxes and Levies (RoSCTL) will continue until the end of the calendar year and will benefit the exporters who have already taken orders. The government will end up spending over Rs. 50,000 crores on this new scheme.
- A fully automatic refund module will be operational by the end of September 2019. It is expected to facilitate quick and automatic refunds of input tax credits, providing a much-needed liquidity boost to traders.
- The Export Credit Guarantee Corporation (ECGC) will provide higher insurance cover under the Export Credit Insurance Scheme (ECIS). The government will extend 1700 crores to the ECGC who will, in turn, disburse it to the banks for providing loans to the exporters. This is expected to reduce the cost of export credit, particularly for the MSMEs.
- Separate export credit for the priority sector is being envisaged, which will be to the tune of Rs. 36,000 crores extending up to Rs. 68,000 crores. The RBI is also examining the norms and guidelines for priority sector lending.
- Active intervention, review and tracking of export finance will be done by an Inter-Ministerial Working Group in the Department of Commerce. There will be more active monitoring of the data on export finance.
- The government aims to reduce the “time to export” at shipping ports and airports with the help of technology. Through seamless digitisation and elimination of manual efforts, India would be able to reduce the turnaround time for export. Currently the best performing Kochi port takes more than a day as compared to less than half a day at ports like Boston and Shanghai. All clearances related to export logistics will be digitised, and an action plan on this will be finalised before the end of the calendar year.
- Annual mega shopping festivals are planned in India across March 2020 for the sectors Gems and jewellery, Handicrafts/Yoga/Tourism, Textiles and Leather.
- A Special Free Trade Agreement Utilisation Mission is to be set up by the Department of Commerce to utilise concessional tariffs and raise awareness about aspects like preferential duty benefits and compliance requirements among exporters, particularly MSMEs.
- To further ease the process of obtaining Certificate of Origin (COI) for exporters, the Director-General of Foreign Trade and the Export Inspection Council will launch an online Origin Management System in the coming weeks.
- To improve the quality of Indian exports, a new working group under the Commerce Ministry will be formed which will look into the timeline for adoption of better mandatory technical standards.
- Enrolment of artisans into a programme will be done at a large scale in an effort to provide the handicraft industry with better access to the e-commerce market.
Some terms explained
ECGC – ECGC is a government-backed organisation formed in 1957 to promote export in the country or the purpose of providing credit risk insurance and related services to exporters. Presently it is being administrated by the Ministry of Commerce, and its board comprises of members from the RBI, the government and people from banking, export and insurance sectors.
FTA – It is an agreement between two or more countries which aims to reduce trade hindrances and costs across its/their borders. In an FTA the countries agree on issues like government tariffs, quotas, prohibitions, dumping/anti-dumping, subsidies etc.
COI – COI is an important document in international trade. This document certifies that a particular shipment originates from a particular country and acts as a declaration by the exporter.
Take a look at how India has fared in terms of the economy since Independence to understand the developmental dynamics of this country.