TAG: GS 3: ECONOMY
THE CONTEXT: India’s apex exporters’ body, the Federation of Indian Exporters’ Organisations (FIEO), has urged the Finance Ministry to increase outlays for the Remission of Duties, Taxes on Export Products (RoDTEP) scheme.
EXPLANATION:
- Despite a focus on fiscal austerity and spending limits, FIEO President emphasized that the government’s commitment to zero-rating exports should not be compromised due to budget constraints.
- Zero-rating exports ensures that no domestic taxes are added to goods meant for export, making Indian goods more competitive in the global market.
The RoDTEP Scheme
- The RoDTEP scheme was launched in January 2021.
- It was designed to refund duties and taxes incurred during the production or export process to exporters.
- This scheme replaced an earlier export incentive scheme that was deemed non-compliant with World Trade Organization (WTO) norms.
- The current budget for RoDTEP stands at ₹15,070 crore for 2024-25, with the scheme having provided ₹42,000 crore in support to exporters thus far.
- However, the scheme has excluded some sectors, limiting its overall efficacy.
- In March 2023, the government extended RoDTEP benefits to special economic zones (SEZs) and export-oriented units (EOUs), which together contribute a quarter of India’s exports.
- However, this extension is only valid until September 30, 2023, due to budgetary constraints.
- This limited timeframe underscores the urgent need for increased funding to ensure sustained support for these critical sectors.
The Call for Policy Continuity and Enhanced Support
- FIEO President’s appeal to the Finance Ministry is twofold.
- Firstly, the policy of zero-rating exports, a cornerstone of the government’s export strategy, should not be hindered by budgetary limitations.
- Secondly, the extension of the five-year extension for the Interest Equalisation Scheme for exporters, which is set to expire soon.
- This scheme provides crucial financial support to exporters, and FIEO President argues for restoring subvention rates to 5% for micro, small, and medium manufacturers and 2%-3% for all exporting producers.
- Such measures are vital for maintaining the competitiveness of Indian exports in the global market.
Broader Implications and Consultations
- The Finance Ministry held a Budget consultation meeting with trade and services representatives, including FIEO, to address these concerns.
- Later consultations on education, skilling, and employment with domain experts has been conducted, indicating a broader strategy to enhance India’s economic framework and workforce capabilities.
SOURCE: https://www.thehindu.com/business/exporters-nudge-finmin-to-raise-rodtep-outlays/article68332564.ece
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