Need govt support, specific incentives for services sectors: Exporters

SEPC says travel, tourism and hospitality sectors need govt support

The government is likely to look into the services industry's demand for sector-specific incentives for exporters, especially the travel, tourism and hospitality sectors that have been badly hit since the outbreak of the pandemic two years ago.

Sunil H Talati, chairman, Services Exports Promotion Council (SEPC), told Business Standard that top officials from the department of commerce have asked the council to come up with sector-specific recommendations, as not all sectors would require support. The government also made it clear that no incentives will be given to the IT sector as its growth is already on an upswing.

“The government has asked for sector-wise suggestions (incentives), regarding why they want, how much they want and the justification. We have asked various sectors to assimilate the data and suggestions,” Talati said, adding that the SEPC will submit recommendations to the government by the end of the month. Apart from travel and tourism, the suggestions will include sectors such as education, legal, medical, accounting and finance. The industry’s demand comes in the backdrop of the government’s ambitious $1 trillion services exports target by 2030 and lack of any fiscal incentives for services exports.

“If you want to achieve that (the target) there has to be special attention given to services sector exports. If not incentive, there is a need for urgent attention to tours and travel industry as it has been affected by the pandemic for two years now. If nothing else, give us a rebate in credit for GST (goods and services tax),” Talati said.

Last year, the SEPC had urged the government to rollout a new scheme – Duty Remission of Expo­rt of Services Scheme – to reimburse un-refunded taxes and du­ties embedded in services exports. The government, however, did not go ahead with the proposal.

Service Exports from India Scheme (SEIS) is the only central incentive scheme that has been rolled out in six years. However, the outlay for it was drastically cut over the years and, according to Talati, the government has also made it clear that the scheme will be discontinued.

The services sector is a key driver of India’s economic growth, provides employment to nearly 26 million people and contributes approximately 40 per cent to India’s total exports.

Services exports have totalled $180.28 billion during the first three quarters of the current fiscal, up 17 per cent year on year. The target for FY22 is $250 billion.