ALSO READGovernment to push for cut in bio-diesel tax with GST Council GST Council gives relief to exporters GST Council meet: Composition scheme threshold hiked, exporters get tax relief GST Council meet: Exporters get tax relief, e-wallet facility, composition scheme threshold hiked Fast-track GST refund, else Rs 65K cr may be stuck: Exporters
The government today topped up incentives by Rs 8,450 crore for exporters in sectors such as leather and agriculture as it looks to add muscle to outward shipments that have been disrupted by implementation of GST. Unveiling the contours in the 'Mid-Term Review of the Foreign Trade Policy (2015-20)' here, Commerce and Industry Minister Suresh Prabhu said incentives have been increased by 2 per cent for merchandise as well as services exports in labour-intensive and MSME sectors. The incentives are aimed at addressing hardships of exporters due to delay in tax refunds under the Goods and Services Tax (GST) regime, which came into effect from July 1. Exports entered the negative terrain after over a year, contracting 1.12 per cent in October, primarily due to the liquidity problem faced by exporters following the GST launch. While the government skipped the annual foreign trade assessment in 2016-17, this year the mid-term review -- originally slated to be announced on July 1 -- was delayed pending review of impact of GST on external trade, which accounts for 45 per cent of India's USD 2.5-trillion GDP. The revised FTP provides for across-the-board increase of 2 per cent in the existing Merchandise Exports from India Scheme (MEIS) for the shipments by MSMEs/labour intensive industries, involving an additional outgo of Rs 4,567 crore. This will benefit sectors such as leather, agriculture, carpets, handicraft and marine products. Further, to give a fillip to services trade, the policy has raised the Service Exports from India Scheme (MEIS) by 2 per cent, envisaging an additional outgo of Rs 1,140 crore. Last month, the commerce ministry had announced a similar 2 per cent additional incentive for garments and made-ups, translating into an outgo of Rs 2,743 crore. "Thus, incentives under the two schemes (MEIS and SEIS) have been increased by 33.8 per cent (Rs 8,450 crore) from the existing incentives of Rs 25,000 crore leading to boost in exports from the labour intensive sectors and increased employment opportunities," the commerce ministry stated. The mid-term review, Prabhu said, "aims to promote exports by simplification of processes, enhancing support to high employment sectors, leveraging benefits of GST, promoting services exports, monitoring exports performance through state-of-the-art analytics". Finance Secretary Hasmukh Adhia, who was also present on the occasion, said the government has been very sensitive towards the exporters, and an export package was approved by the GST Council resolving the problem of blockage of working capital. He said input tax credit (ITC) and Integrated-GST refunds for exporters are being expedited and explained in detail the process and procedure for refund of the claims for exporters. "GST was appreciated by all for being the game-changing tax reform. I assure you that exporters will be benefited from GST in long term," Adhia said. Referring to GST, Prabhu said introduction of the new tax regime "would be the catalyst for spurring growth in the export sector. The lower duty on most of items and reduction of cascading effect of various duties would lower the cost and make exports competitive". He asserted that green shoots in export growth are distinctly visible now, with exports growing in 13 of the past 14 months. Later, fielding queries on refunds of the exporters, Prabhu said: "We are working very closely with the finance ministry.
We work for the exporters, take up their causes. I am very happy to say that the finance ministry also responds to it very quickly...." As per the break-up provided in the FTP, additional annual incentive of Rs 749 crore have been provided for the leather sector, Rs 921 crore for hand-made carpets of silk, handloom, coir, jute products, Rs 1,354 crore for agri products, Rs 759 crore for marine products, Rs 369 crore for telecom, electronic components, Rs 193 crore for medical equipment. The FTP also provides for a new scheme of 'Self- Assessment' based duty free procurement of inputs required for exports. The emphasis of the government, according to Prabhu, will on 'Ease of Trading' across borders. Information-based policy interventions will be ensured through state-of-the-art trade analytics division. A new Logistics Division has been created in the Department of Commerce to develop and coordinate integrated development of the logistics sector. While welcoming the announcement, exporters' body FIEO suggested that the government should gradually extend the MEIS to other sectors of exports since they are also up against numerous challenges.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)