MID WEEK CAPSULE : Union Budget 2023-24

By Mr. Babu Ezhumavil

Dear Subscribers/Readers,

It remained always a joy for us to engage our readers in enriching their knowledge through our Online Portal and E-Newsletter. Harping on this, we started a new column MID WEEK CAPSULE in the matter of regulatory aspects relevant to exports and imports. The said knowledge based column will be published on every Wednesday with different Topics.

This column is handled by Mr. Babu Ezhumavil who is known to the trade for long time.He started his career in Baroda with an exporter in 1978. Many companies could use his long experience. His approach to the problem are individual and tailor made but within the legal limits, says some of the trade members who had experienced it.

The dust and the heat raised by the National Budget in the last week is almost settled down. Exporters did not expect anything direct from the national budget. They look for the allocation for their ministry, Commerce and Industry. They might be happy in knowing the increase in allocations to some schemes irrespective of its adequacy. The fact remains that Exporters are the actual foreign exchange earners who got very little in this budget.

The budget allocated a meagre 10% increase for the commerce department’s current popular Remission of Duties and Taxes on Export Products (RoDTEP) scheme over last year i.e. from Rs. 13,699 crores in 2022-23 to Rs. 15,069 crores.

Similarly the other popular Rebate of State and Central Taxes and Levies (RoSCTL) — a similar scheme for garments and made-ups — got an increase of little above 11%, if one calculates the increase i.e. from 7461 crores to 8405 crores.

Technically these are refunds to exporters the embedded non-creditable central, state and local levies paid on inputs, which are not refunded in any manner.

Another attractive scheme is interest equalization. The allocation for it also got an increase to Rs. 2,932 crore in 2023-24 from Rs. 2,376 crores in 2022-23. The scheme provides subsidies for pre- and post-shipment export credit and mostly covers labour-intensive sectors. This increase is an interest subvention support to exporters against rising interest rates.

Federation of Indian Export Organisations (FIEO) said the move will help support exports, particularly by MSMEs. The increase in allocation may result in increasing the subvention support as demanded by the exporters in view of rising interest rates.

Other than these little increases, nothing phenomenal steps are found to boost exports. Perhaps, while announcing a new foreign trade policy at the end of this financial year, exporters may facilitated with more subjective or sector-wise promotions.

TMA (now available to farm exports only) and SEIS are to be reintroduced to boost agro and service exports. The concept that Service exporters enjoy an inbuilt profit is unfair. The Forex earning through exports is outright income and not to go back, especially the services exports. 

Exporters are still reeling under two main policy problems. Many EPCG authorisation holders are holding back their obligations expecting an amnesty scheme to reduce their liabilities to close their files with different regional authority offices. They face serious problems in maintaining Average Export Performance.

Another one is GST matter on Advance Authorisations. With the introduction of GST followed by pre-import conditions, many exporters face legal actions as they have imported and exported goods as usual and what they were used to do in the past. The pre-exemption of IGST is not available like central excise duty and thus it came to an abrupt end with the implementation of GST. Till that time this AA facility was a replenishment scheme.  Now the scheme is no more a replenishment scheme. How to correct the mistaken (inadvertent too) imports is not within the hands of exporters as per the PN 33 dated 13.10.2017, though a short time relief is granted on an afterthought. The matter is now with Supreme Court.

There are some exporters who have been put into trouble due to automatic RoDTEP scrip generation by the system. These scrips are issued on shipping bill-wise and its duty credit too. Some exporters face a strange problem on this credit because some products have been delisted from RoDTEP refunds. They wanted to get deleted those products and the credit. Since the scrip has already been issued, they may have to refund it, as if it were used. The truth remains correct that they have not utilized the credit. Scrips are system generated. Any idea Sirji to escape the loss?

Written by:

Mr. Babu Ezhumavil