Key Export Schemes in India Likely to Get Extension Amid Global Market Uncertainty
Indian Government Set to Extend Vital Export Schemes
India is likely to extend two major export promotion schemes, the Remission of Duties and Taxes on Exported Products (RoDTEP) and the Interest Equalisation Scheme (IES), to help exporters stay competitive in a challenging global market. The RoDTEP scheme, which reimburses embedded input duties and taxes on exported products, is scheduled to expire on September 30, 2024. However, sources indicate it will likely be extended for the 2024-25 fiscal year and possibly beyond, depending on available funds.RoDTEP Scheme Extension and Impact
The RoDTEP scheme covers over 10,000 product lines and is crucial for maintaining export growth. Officials suggest that some iron and steel items, currently excluded from RoDTEP, may remain outside the scheme. The Quarterly Monitoring Committee, led by the Finance Secretary, will soon decide on the extension and its duration.
A review suggests that if export growth remains modest, the allocated funds of approximately $1.93 billion for 2024-25 should suffice. However, if exports rise significantly, additional funds may be necessary.Textile Exports and Budget Reallocation
The Rebate of State & Central Taxes and Levies (RoSCTL) scheme, similar to RoDTEP but focused on garments and made-up articles, may see budget adjustments. Textile exports have been flat this year. The 10% increase in the budget outlay ($96 million) might be redirected to RoDTEP. The Finance Secretary-led committee will make the final decision.Interest Equalisation Scheme Under Review
The Interest Equalisation Scheme (IES), which offers subsidized loan rates to exporters, expired for non-MSME sectors on June 30, 2024. A two-month extension was granted to the MSME sector, but this too will end in August. The Commerce Department has proposed a five-year extension of the IES. However, the final decision will come from the Expenditure Finance Committee (EFC) and the Union Cabinet.Export Trends and Market Conditions
India's goods exports grew by 4.15% year-on-year, reaching $144.12 billion from April to July 2024-25. However, July exports dipped by 1.4%, totaling $33.98 billion, due to geopolitical tensions and rising protectionism.Conclusion
The potential extension of the RoDTEP and IES schemes could provide essential support to Indian exporters, helping them navigate a volatile global market. These measures are critical for sustaining export growth and ensuring that Indian products remain competitive worldwide.