Survey proposes cutting down export promotion schemes
PAYOUTS ACCOUNT FOR ~35,000 CRORE IN GOVT FUNDS
The government should streamline the various export promotion schemes currently running while aiming towards phasing out some of them, the Survey has suggested. “Many duties have been subsumed under the GST (goods and services tax) and if tariffs are reduced to realised or near-realised levels, some export promotion schemes can be phased out,” the Survey said.
Recognised exporters of manufactured goods receive credit incentives, generally in the form of duty drawbacks, in various forms. The three major sector-specific ones are the Advance Authorisation Scheme, Export Promotion Capital Goods Scheme and the Deemed Exports Scheme, accounting for ~35,000 crore in government payouts.
Apart from this, traders also earn duty credits in the form of scrips under the Merchandise Exports from India Scheme apart from Services Exports from India Scheme and the Incremental Export Incentivisation Scheme.
Incidentally, the government had last week clarified that scrips received under the above three schemes will attract tax of 12 per cent under the GST regime.
However, exporters expressed dissatisfaction with such an idea. The scrips could be used for payment of central taxes such as Customs duty or excise duty and service tax on future procurement of goods and services. But, under the GST, the scope of payment has reduced to only the basic Customs duty, Ajay Sahai, director general of the Federation of Indian Export Organisations, said.
The Survey has also suggested lowering duty drawback rates with any revenue saved subsequently being used for export marketing efforts.
“If refunds and Customs duty drawbacks are deducted from gross Customs revenue, then the net realised tariffs (BCD) would be still less. Though different rates of tariffs are levied for various reasons, there is scope for reducing average applied tariffs by selectively reducing tariffs across many lines, while retaining higher tariffs for sensitive and important items,” it says.
The Survey has suggested lowering duty drawback rates with any revenue saved subsequently being used for export marketing efforts