Over the past few months, there has been a high degree of optimism regarding India’s export prospects, with commerce minister Piyush Goyal setting a target of $400 billion for FY22. If realised, this target would exceed the highest level of exports that the country has ever achieved, of $330 billion in 2018-19, by over 21%. There are good reasons for optimism; exports have exceeded $163 billion for the first five months (April-August) of the current fiscal, which is nearly 23% higher than the level achieved in the corresponding period in 2019-20, the ‘normal’ year before the Covid-19 pandemic. But, more importantly, April-August 2020-21 witnessed a level of exports that has never been seen in the past.
India’s exports surged on the back of consistent recovery of the global economy, especially in the country’s main export destinations. The US and China, the two largest export destinations, expanded by 6.6% and 8%, respectively, in the second quarter of 2021. But in the current quarter headwinds could develop, as China is expected to grow at 2.5%. India’s exporters must override these uncertainties to maintain the exceptional growth in exports recorded in the first half of 2021.
The government has lent a helping hand to exporters by notifying the new export promotion scheme, the Remission of Duties and Taxes on Exported Products (RoDTEP). Announced over a year ago, the RoDTEP replaced the Merchandise Exports from India Scheme (MEIS)—discontinued in December 2020. The objective of the RoDTEP is to refund the yet non-refunded taxes and levies imposed on an exported product at the central, state and local levels, including prior stage cumulative indirect taxes on goods and services used in its production, as well as all taxes and levies imposed on its distribution.
As compared to the RoDTEP, the MEIS was a very ambitious scheme. Introduced in the Foreign Trade Policy 2015-2020, the MEIS was expected to “offset infrastructural inefficiencies and associated costs involved in export of goods … especially those having high export intensity, employment potential and thereby enhancing India’s export competitiveness.” Under the MEIS, incentives were issued as duty scrips to be used for payment of several duties by exporters. However, two sets of constraints led to the decision to discontinue the MEIS.
Read More at https://www.financialexpress.com/opinion/putting-indias-exports-on-a-sustained-growth-path/2334797/
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