Budget 2025: Expectations for Export Support
As India approaches the Union Budget for 2025-2026, anticipation is building around potential increases in funding for key tax remission schemes aimed at exporters. Finance Minister Nirmala Sitharaman is expected to announce a nearly 10% increase in allocations for two significant programs: the Remission of Duties and Taxes on Exported Products (RoDTEP) and the Rebate of State and Central Taxes and Levies (RoSCTL). These adjustments come at a crucial time as exporters face challenges in a fluctuating global market.
Increased Funding for Exporter Support
In the July 2024 budget, the government allocated Rs 16,575 crore for the RoDTEP scheme, which reimburses exporters for various duties and taxes. Additionally, Rs 9,246 crore was designated for the RoSCTL scheme, specifically targeting textile and garment exporters. These allocations are designed to help Indian exporters remain competitive in the global market.
The expenditure department is currently reviewing a proposal from the commerce department to provide additional funds for the RoDTEP scheme. This proposal aims to address a shortfall of Rs 1,800 crore, which has arisen due to increased demand for tax remission. A senior official indicated that a decision on this proposal is expected soon, which could further bolster support for exporters.
The RoDTEP and RoSCTL schemes are essential for aligning Indian exports with global best practices. They allow the government to reimburse eligible exporters for state and central taxes and levies on inputs used in producing exported goods. This support is crucial for maintaining competitiveness and ensuring that Indian products can thrive in international markets.
Addressing Global Challenges
Export bodies have voiced their concerns about the current demand slowdown in advanced nations. They have urged the government for increased support to navigate these challenges effectively. The ongoing tariff war between the United States and China presents both risks and opportunities for Indian exporters.
Ashwani Kumar, president of Indian export organizations, highlighted the potential for India to capture a share of the $25 billion worth of export opportunities across various sectors, including electronics, auto parts, chemicals, and textiles. The government’s support through enhanced funding for remission schemes could play a pivotal role in leveraging these opportunities.
Furthermore, the expenditure and commerce departments are working to extend RoDTEP support to companies in special economic zones (SEZs) and export-oriented units. This extension aims to provide a broader safety net for exporters, ensuring they can continue to thrive despite external pressures.
The Impact of Remission Schemes
The exact refunds under the RoDTEP and RoSCTL schemes vary based on the type of products exported. For instance, eligible exporters under the RoDTEP scheme can receive reimbursements ranging from 0.3% to 4.3% of the freight-on-board value of their exported products. This financial support is crucial for exporters, especially in a year where merchandise exports have seen a modest annual increase of 1.6%, reaching $322 billion.
The World Trade Organization (WTO) has projected that global trade volume could rise from 2.7% to 3% in 2025, contingent on the resolution of conflicts in West Asia. This potential growth underscores the importance of maintaining robust support for Indian exporters as they navigate a complex global landscape.
In the pre-budget meeting held on December 26, export bodies reiterated the need for sustained government support to counter external challenges. The upcoming budget will be a critical moment for the government to demonstrate its commitment to supporting the export sector and ensuring its growth in the coming years.
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