Union finance minister Nirmala Sitharaman announced a slew of measures to boost sagging exports and a stressed real estate sector, amid growing concerns about the health of the economy. Sitharaman’s third booster shot for the economy came a day after the latest trade data revealed poor trade performance, with exports falling for the second time in three months, while imports have slid for three straight months now.
The new package of measures for exports sector came in six different silos and covered steps that would address comprehensively tax and duties refunds for exporters; improve credit flow to the export sector and launch of a special free trade agreement (FTA) utilisation mission. India will also now host annual mega shopping festivals in 4 places.
Pointing at recent industrial production and investment data as signs of revival, Sitharaman said measures announced over the last three weeks would aid a pick-up in economic growth. “In spite of all the worries... we see a clear sign of revival in the first quarter of the 2019-20 and up to July-end... revival signs are very, very consistent,” the minister said.
New scheme RoDTEP announced
Sitharaman announced the introduction of an attractive new scheme for remission of duties or taxes on export product (RoDTEP) to replace the existing Merchandise Exports from India Scheme (MEIS) from January 1 next year and revised priority sector lending norms for export credit that will release an additional £3.6 to £6.8 billion as export credit under priority sector.
Sitharaman said RoDTEP will result in the government foregoing revenue of up to £5 billion annually - 36% higher than the £3.66 billion budgeted for MEIS. It is very difficult to put an exact number on this as the duty remission will vary from sector-to-sector, she explained. “With the introduction of RoDTEP, all the uncertainty over continuation of MEIS is over”, Sitharaman said.
Housing sector
As part of the measures rolled out to boost the housing sector, Sitharaman announced that a £ 2 billion fund would be set up to provide last mile funding for affordable and middle income housing projects that have not been classified as non-performing assets and are not facing insolvency action. The move is expected to potentially benefit 350,000 dwelling units across the country.
The FM also announced an automated mechanism for refund of GST-related tax credit of exporters to address a complaint that had not been addressed for over two years. “In challenging times, each and every penny matters. Therefore, if fully automated refund module can deliver GST refunds to exporters in a timely manner, this should go a long way in improving their working capital thereby providing much needed impetus to exports” said Harpreet Singh, a partner at consulting firm KPMG.
