The government announced export incentives of around Rs 8,500 crore for
labour-intensive sectors and services on Tuesday as it sought to blunt the
impact of the goods and services tax (GST) and push shipments from the country
especially textiles, leather and engineering goods amid signs of a pickup in
Incentives under the Manufacturing Exports from India Scheme (MEIS) and
Service Exports from India Scheme were targeted at labour-intensive sectors
such as agriculture, leather, carpets and marine products and came days before
the Gujarat elections, where the launch of GST and the impact on small businesses
especially gems and jewellery has emerged as a key issue.
The government has also been facing criticism from exporters over tardy
refunds. A reduction in drawback rates, meant to offset the impact of taxes,
and by doubling incentives to 4 per cent under MEIS the Centre is hoping to
address the concerns and shield Indian businesses from the adverse impact of
competition especially from Bangladesh and Vietnam.
The incentives of Rs 8,450 crore that will be applicable from November
include higher benefits of Rs 2,743 crore offered to readymade garments and
made-ups a few days ago. All put together, there will a 34 per cent rise in
sops from the existing Rs 25,000 crore.
At the same time, there is an effort to reorient the focus with a thrust on
the farm sector, where a new export policy is in the works, while encouraging
Indian companies to be part of global and regional value chains at a time when
multinationals such as Apple depend on inputs and expertise from across the
globe to manufacture iPhones.
While unveiling the midterm review of the five year policy launched by the
present government two years ago commerce minister Suresh Prabhu said the
policy aims to promote exports by simplification of processes, enhancing
support to high employment sectors, leveraging benefits of GST, promoting
services exports, monitoring exports performance through state-of-the-art
Some of the so-called thrust areas — such as product and country
diversification — have been on the wish list of every trade minister although
the progress has been slow as the US, Europe and the UAE remain the dominant
destination for Indian exports. But the government is hoping to leverage the
WTO's trade facilitation agreement to make life simpler for exporters and
importers, with Prabhu giving special emphasis on ease of trading borders,
where India has not fared well. Along with a push to improving the logistics
network, the government is hoping to address oft-repeated concerns over high
cost of doing business in the country, which makes exports less competitive in
the global market.
There was an emphasis on easier compliance burden as the government
announced a new self-ratification scheme to allow import of duty-free inputs
for export production with a view to expedite export of new pharma, chemicals,
textiles, engineering and high technology goods.