Big relief: Exporters to get tax refund dues of 56,000 crore
The government will release Rs 56,027 crore to clear all the pending dues owed to exporters until FY21 under various schemes, which will substantially bolster their cash flow and help the country realise its aggressive export target of $400 billion for FY22, commerce and industry minister Piyush Goyal said on Thursday.
This amount is over and above the recently-proposed refund of Rs 12,454 crore under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme and Rs 6,946 crore under the Rebate of State and Central Taxes and Levies (RoSCTL) programme for garment and made-up exporters, Goyal clarified. This means the allocation of Rs 19,400 crore will now be utilised to settle only FY22 claims under these two schemes (earlier it was to cover claims over a 15-month period through March 2022).
With the latest move, all the earlier dues will be cleared, which will have a multiplier effect and spur employment generation, the minister said.
The move ends uncertainties over the release of past arrears and comes as a huge relief to pandemic-hit exporters as they try to reap benefits of a surge in demand for merchandise and services amid a global economic resurgence.
Exporters have also been hit by a global spurt in shipping costs (an over 300% jump in August from a year before for domestic suppliers).
The dues amount will be disbursed in the form of scrips to more than 45,000 exporters, about 98% of whom are small and medium enterprises, Goyal said. This has the concurrence of both Prime Minister Narendra Modi and finance minister Nirmala Sitharaman, he added.
The move comes at a time when the Centre has reined in “wasteful expenditure” across dozens of departments amid a surge in revenue collection. The Centre’s net tax receipts jumped 161% until July, against the full-year growth target of just 8.5%. Its fiscal deficit in the first four months of this fiscal stood at only 21.3% of the full-year budget estimate, the lowest in about a decade, leaving it with enough fiscal headroom for spending in areas with high-multiplier effect.
The Rs 56,027-crore allocation is for different export promotion and remission schemes: Merchandise Exports from India Scheme (Rs 33,010 crore), Services Exports from India Scheme (Rs 10,002 crore), RoSCTL (Rs 5,286 cr), Rebate of State Levies (Rs 330 crore), RoDTEP (Rs 2,568 crore) and other legacy schemes like “Target Plus” for high-performing export houses, etc, (Rs 4,831 crore).
The Rs 2,568-crore outlay for RoDTEP is for the January-March 2021 period (It was introduced on January 1, replacing the MEIS). Of the Rs 10,002 crore for SEIS, Rs 2,061 crore has been earmarked for FY20. This means service sector exporters, including those in the travel, tourism and hospitality segments, will be able to claim the SEIS benefits for FY20, a formal notification for which was pending. However, certain provisions of SEIS for FY20 are being revised and rates notified.
Exporters will have to file all the pending claims (until FY21) by December 31, so that all the dues can be cleared this fiscal itself, Goyal said. The IT portal of the commerce ministry for exporters to file claims will be enabled soon to accept applications. This would be integrated with a mechanism set up by the finance ministry to monitor the provisioning and disbursement of the export incentives under a budgetary framework.
India has witnessed a surge in outbound shipments this fiscal and the expeditious clearance of dues will help the country achieve a rapid pace of export growth, Goyal said.
After a Covid-induced 7% drop in FY21, the country’s exports until August have now exceeded even the pre-pandemic level for six months in a row. Outbound shipments in the first five months of this fiscal rose to $164 billion, recording a jump of 67% year on year and 23% from the pre-Covid (same period in FY20) level. In the first week of September, exports hit $7.5 billion, maintain the impressive pace of growth, Goyal said.
Hailing the government’s decision, A Sakthivel, president of the apex exporters’ body FIEO, said it will help the sector meet its liquidity concerns and maintain cash flow, thereby further boosting export potential of the country. It will also add to exporters’ confidence that the government is willing to offer close support as they chase an ambitious target, he added.