FTP review: Com Min likely to extend incentives for exporters
With exporters raising concerns over working capital issue under the upcoming GST regime, the commerce ministry is expected to provide incentives such as enhanced interest subsidy to sectors like agri commodities to boost exports.
The incentives could be announced as part of the foreign trade policy (FTP) review, an official said.
"Currently we are not getting interest subsidy benefits.
The government should consider extending this to us besides other incentives so that we can increase rice exports," KRBL CMD Anil Mittal said.
KRBL is a leading rice exporter and sells basmati rice under India Gate brand.
The Federation of Indian Export Organisations (FIEO) too said that the cost of liquidity is high and the government should look at ways to reduce that.
"The ministry should look at increasing the interest subsidy and Merchandise Exports from India Scheme (MEIS) each by 2 per cent," FIEO Director General Ajay Sahai said. He added that cost of business would go up for exporters under the Goods and Services Tax (GST), to be rolled out from July 1, as exporters have to pay the duties first and then seek refund.
According to FIEO, due to this, working capital worth over Rs 1.85 lakh crore would be stuck with the government in the new indirect tax regime. Currently they get ab-initio exemptions on duties.
As part of the FTP review, the ministry is consulting all stakeholders on providing support to certain sectors to boost exports. The ministry has aimed at completing the review process before the GST rollout.
Under MEIS, the government provides duty benefits at 2 per cent, 3 per cent and 5 per cent depending upon the product and country.
In 2015, the ministry had announced 3 per cent interest subsidy for exporters to cut cost of credit for sectors including SMEs, handicrafts, agri and food items.
Although the country's overseas shipments have started showing positive growth, global economic situation is still not improving at a healthy rate. India's exports rose by 19.77 per cent to $24.63 billion in April.