Continuation of the Export Promotion Scheme for an Additional Nine Months 2023
The global trading landscape is characterized by dynamic market scenarios, economic fluctuations, and competition.
Export promotion schemes play a critical role in enabling countries to remain competitive and ensuring that local businesses can navigate global markets effectively.
Recently, the government announced a nine-month extension to its popular Export Promotion Scheme. Remission of Duties and Taxes on Export Products (RoDTEP), the government’s main export promotion programme, was extended on Tuesday for an additional nine months, concluding on June 30, 2024.
According to a release, a committee has been established to assess the rates of incentives offered under the plan. The programme, which debuted in 2021, includes exports of 10,610 different items. Since then, it has undergone several additions and adjustments. At the end of this month, the most recent extension was set to expire.
“The Department of Revenue has once again established the RoDTEP Committee to assess and suggest the ceiling rates under the RoDTEP Scheme for various export industries. The scheme’s inaugural meeting took place on Tuesday, according to the release. Chambers of business and export promotion councils have pushed for a larger financial allocation for the programme as well as higher rates to be applied to all exports.
The extension would assist exporters in negotiating contracts on better terms in the current global context.
The RoDTEP programme is intended to reimburse municipal, state, and federal taxes, fees, and levies that are added to the price of goods intended for export. It serves as a successor for the Merchandise Exports from India initiative, which the US successfully challenged at the World Trade Organisation along with other export incentive programmes.
The tax refund percentage under the plan ranges from 0.5% to 4.3% of the product’s value. The incentive is given in the form of transferable duty credit scrip, which exporters may either sell on the open market or use to pay import tariffs.
RoDTEP facilitated exports of $450 billion in FY23 at a cost of Rs 13,020 crore. It assisted $421 billion in exports in 2021–2022 and cost Rs 12,100 crore.
A support amount of Rs 27,018 crore had been added to the plan for the 27-month period ending in March 2023.
The RoDTEP plan runs under a financial framework, and it has a budget of Rs 15,070 crore for FY24.
The Export Promotion Scheme (EPS) is an initiative by the government aimed at boosting foreign trade and making domestic products more competitive in the international market.
Typically, such schemes encompass a range of incentives, such as tax reliefs, subsidies, or preferential access to credit, designed to encourage businesses to explore and enhance their export capabilities.
As the global economy grapples with the aftermath of the COVID-19 pandemic, countries are working to rejuvenate their export sectors. The extension offers a window of continuity for businesses still recovering from pandemic-induced disruptions.
The global market is ever-evolving. By providing businesses with consistent support via the EPS, the government aims to ensure that its exports remain competitive against those from other countries.
SMEs often lack the resources to compete at an international level. The extension of the scheme ensures continued support, enabling them to establish a stronger footing in foreign markets.
While the fundamental characteristics of the EPS remain unchanged, certain nuanced enhancements could be introduced based on the evolving needs of the industry and feedback from stakeholders.
The extended scheme might incorporate more sectors or products, ensuring broader inclusivity.To encourage maximum participation, the government could consider streamlining documentation and procedures.The scheme could potentially offer higher monetary benefits, either through direct subsidies or reduced interest rates for export credits.
With continued support, businesses will likely increase their export volumes, enhancing the trade balance.A surge in exports often leads to increased production, employment, and overall economic growth.
Successful trade partnerships can lead to stronger diplomatic ties with other countries.To remain competitive, businesses will be prompted to innovate and improve product quality, benefiting the end consumers.
Geopolitical tensions, trade wars, and other global economic uncertainties can impact the effectiveness of the EPS.It’s essential that businesses don’t become overly dependent on government incentives and focus on organic growth and self-sustainability.The government needs to ensure that the allocated resources for the scheme are used judiciously and that there’s minimal wastage.
The nine-month extension of the Export Promotion Scheme signifies the government’s commitment to bolstering its export sector and aiding economic recovery.
While the move promises multiple benefits, the success of the scheme will largely depend on its implementation, adaptability to changing market scenarios, and the resilience of the business community. This move is a testament to the role of strategic policy decisions in shaping a nation’s economic trajectory.