Commerce and industry minister Piyush Goyal said on Friday that the earlier plan to boost exports through subsidies hasn’t really yielded the desired results, but the new tax remission schemes for exporters, apart from being compatible with the World Trade Organization (WTO) rules, have found “very good acceptance” and are helping the country’s merchandise exports to grow to a record $400 billion this fiscal.
He was responding to a query in the Rajya Sabha about a cut in the budgetary outlay for export promotion schemes.
“No country can rely only on subsidies to promote exports,” he asserted. “India, over a period of time, has been promoting exports through subsidies, but that has not really given us the desired result or given us the huge impetus that one would have expected,” he added.
The government introduced the Remission of Duties and Taxes on Export Products (RoDTEP) scheme in January last year, which replaced the WTO-incompatible Merchandise Exports from India Scheme (MEIS). Separately, the government also runs another tax remission programme — RoSCTL — for garments and made-up exporters. The outlay for tax refund under both the RoDTEP and RoSCTL programmes stood at Rs 19,400 crore for FY22, about a half of the support extended under the MEIS in FY20. Of course, these are not strictly comparable schemes (the MEIS was an incentive programme). However, RoDTEP alone covers 8,555 products, over a thousand products (tariff lines) more than the MEIS. For FY23, the government has budgeted Rs 21,340 crore for the two tax remission schemes.
In the past, too, Goyal had exhorted exporters not to rely on the crutches of subsidies and instead boost their competitiveness, which would be key to achieving sustainable export growth.
On Friday, the minister said although there is a thinking that the government has reduced export subsidies, the reality is, India is going to see a “record performance in exports” in FY22. Merchandise exports until January this fiscal stood at $334 billion, higher than even the earlier annual record of $330 billion (in FY19), and “we are well on track to go to $400 billion export in the current year”, Goyal said.
Moreover, over decades, India has integrated more with the outside world where such subsidies are not allowed under the WTO, he said. India has lost a case at the WTO on its export subsidies through schemes like the MEIS on a complaint filed by the US (of course, New Delhi has appealed against the ruling).
Goyal highlighted that every nation has certain products and services which are its strength. Every theory in the world suggests the focus should be given only on those items where one has competitive strength, he added.
“Therefore, our approach is that we reimburse the taxes or cess or duties that are notified on the product by the states. As far as the central government is concerned, usually most products are under the GST (goods and services tax) and it automatically gets refunded when you export the product,” he said.
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