Incentives to Boost Export
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General Studies 3
- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
General Studies 2
- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
In News: Incentives announced by the government will help in boosting the country’s exports at a time when there are signs of worsening global economic conditions and it will help in boosting outbound shipments, according to exporters. The new measures announced for the sector in form of incentives and refund of taxes will not only go a long way in enhancing the growth prospects in the short-term but will also give it a much needed boost in the medium-term and long-term.
There are two big roadblocks to expansion of global trade today –
- Lack of easy availability of working capital
- Inefficiencies and delay
The government is focusing to provide solution for both these issues. The usage of technology to reduce the time to export and make export more seamless is a good initiative that would help make our exports more competitive
What has been introduced?
- Giving three months lead time till 31st December to the existing incentive scheme MEIS (Exports from India Scheme) will remove the uncertainty creeping in the minds of the exporters and will greatly help to finalise their export orders
- Extending the scheme of reimbursement of taxes and duties for export promotion
- Fully automated electronic refund for Input Tax Credits (ITC) in GST; aimed at quick and automated refunds of ITC.
- Revised priority sector lending norms for exports
- Export Credit Guarantee Corporation (ECGC) will expand the scope of export credit insurance service (ECIS) to offer higher insurance cover to banks lending working capital for exports, is a step that should help MSMEs facing liquidity issues for exports.
- India to host Dubai-like shopping fest to boost exports: A Dubai-like mega shopping festival will facilitate exchange between global producers and consumers
- Scheme for Remission of Duties or Taxes on Export Product (RoDTEP)
An inter-ministerial working group has also been formed to monitor export finance. The announcement comes in the backdrop of India’s merchandise exports declining by 6.05 per cent to USD 26.13 billion in August compared to the year-ago month.
- Accordingly, the scheme for Remission of Duties or Taxes on Export Product (RoDTEP) was announced which will replace Merchandise Exports from India Scheme (MEIS) for textiles.
- In effect, RoDTEP will more than adequately incentivise exporters than existing schemes put together.
- The new scheme of Remission of Duties or Taxes on Export Products (RoDTEP) with revenue burden of up to Rs 50,000 crore for the government, looks attractive as it will neutralise all duties and levies suffered by the export products.
- The new scheme will benefit the exporters, especially MSME exporters as well as encourage first time exporters to explore global opportunities
The government must draw on its political capital to push through contentious reforms that address the deeper structural issues plaguing the economy. Even in the midst of a slowdown in global trade, India, which accounts for around 2 per cent of global trade, should look aggressively to expand its share. After all, in the current economic environment of subdued domestic demand and investment, exports could provide the much needed boost to growth.
Connecting the Dots:
- Examine the impediments that have constrained the growth of exports in India. Suggest policy measures to address the same. .
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