Finance minister Nirmala Sitharaman on Saturday announced a slew of measures including a new attractive scheme to refund the duties and taxes on exports that will replace all existing schemes in a bid to stimulate exports and the economy.
The new scheme which will benefit all products including textiles is more beneficial to the industry, the minister said at a briefing.
“This will incentivise all exporters more than all the existing schemes put together. The revenue forgone is projected at upto ₹50,000 crores," said the minister. Sitharaman also announced a fully automated electronic refund system for giving Goods and Services Tax (GST) credits to businesses on the taxes paid on raw materials.
Sitharaman said that the existing schemes for refund of duties and taxes to exporters will continue till the end of this year. From 1 January, only the new system will be available.
Sitharaman’s announcement is part of the measures the government is taking to reverse a sharp economic slowdown that has become a political headache for the Narendra Modi administration. Sitharaman also announced a host of steps to give relief to exporters and boost trade.
India’s merchandise exports in August declined for the second time in the current financial year, which began in April, while imports dropped for the third consecutive month, signalling that rising protectionism and trade tensions between the US and China are impacting India’s trade prospects as well.
Data released by the commerce ministry showed India’s merchandise exports declined 6.05% in August while merchandise imports dropped 13.45% leading to the narrowing of trade deficit to $13.45 billion during the same month.
Kerala finance minister Thomas Isaac tweeted on earlier on Saturday: Exports contracts 6% in August. Yet trade deficit narrows as imports decline by 13%, reflecting partly stagnation in domestic production. So much for the ambitious target of $1 trillion for the next 5 years set by the commerce ministry.
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