Finance Minister Nirmala Sitharaman on Saturday announced new measures to boost exports, at a time when the government is making efforts to reverse the economic slowdown and aims to triple the country's annual exports to over $1 trillion.
Some of the key measures announced by Nirmala Sitharamn are as follows:
1. Remission of Duties or Taxes on Export Products (RoDTEP), a new scheme announced by Sitharaman, is going to replace the premier Merchandise Exports from India scheme (MEIS) for all goods exported. The MEIS, introduced in 2015 under the Foreign Trade Policy, incentivises merchandise exports of more than 5,000 items now. Exporters earn duty credits at fixed rates of 2 per cent, 3 per cent and 5 per cent, depending upon the product and country. Officials said the rates are yet to be decided in the new RoDTEP scheme but it will be based on previous method.
Sitharaman clarified that existing support given to garments exports through either the MEIS or Rebate of State and Central Taxes and Levies (RoSCTL) scheme will continue till December, 31, 2019. This will help those exporters who have already taken orders. It will more than adequately incentivise exporters compared to all existing schemes together. The government will be spending up to Rs 50,000 crore on this scheme.
2. On the issue of unpaid input tax credit - a major gripe of traders - the government has announced an electronic refund model for quick and automatic refunds for exporters. This is expected to monitor and reduce the lock up of funds. Sitharaman said this will go live by the end of the month.
3. To deal with the demands for more export finance, the export credit guarantee corporation will offer higher insurance cover. It will expand the funds disbursed to banks which are ultimately lent to exporters. The government will provide Rs 1700 crore annually in this regard. Adequate foreign currency resources will be made available at reasonable cost to banks with support of RBI. The government hopes these interventions will ensure that foreign and Rupee export credit interest rates will be below 4 per cent and 8 per cent respectively and increase credit availability.
4. As an extension of this measure, the government also announced that an additional Rs 36,000 crore to Rs 68,000 crore will be made available to banks for lending to the export sector as part of a planned update to the priority sector lending norms. The RBI will soon bring out enabling guidelines that will update the current norms.
5. Data on export finance to be regularly monitored by an inter ministerial working group under the Commerce Department. It will track the disbursal of export credit through a public dashboard, reviewed with the help of trade institituions..
6. To reduce turnaround time for exports at shipping ports and airports, the government has a broad plan to leverage technology. As of now, major international ports like Boston or Shanghai take just half a day to offload goods for a ship, load it with new merchandise and send it off. As opposed to this, India's best performing port - Kochi - takes more than a day to the same, resulting in major losses in commercial flows.
To combat this, the Finance Minister announced that all clearances related to export logistics, especially crucial customs related procedures that currently require manual processing, will soon be made digital. An action plan in this regard will be taken up and completely implemented by December, she added. This will include another inter ministerial group to monitor the turnaround time in real time.
7. Annual mega shopping festivals, similar to ones currently held in Dubai have been planned to promote Indian exports globally. By March, 2020, the government will hold these fairs in four cities with a focus on gems and jewellery, handicrafts, yoga, tourism, textiles and leather sectors. New Delhi hopes this will enthuse small and medium firms, especially in handicrafts and lead to greater trade linkages
8. A Free Trade Agreement utilization mission has been envisaged that is set to coach exporters on how to better use the concessional tariffs currently available to India as part of signed FTAS. Working in tandem with the Federation of Indian Export Organisations and the 32 export promotion councils of the Commerce Ministry, the mission will aggressively push awareness of preferential duties that Indian exporters do not usually opt for.
9. An origin management system to be launched in the next few weeks by the Directorate General of Foreign Trade to help exporters obtain certificates of origin. This is expected to increase ease of doing business
10. Time bound adoption of mandatory technical standards to weed out sub-standard imports as well as improve the quality of India's own exports have been announced. Again, a new working group in the Commerce Ministry has been announced which will lay out the timeline for adopting better standards.
11. To enable the handicraft industry to better access the e-commerce market, a mass enrollment of artisans into a program to better prepare them for the digital era has also been announced.