With India’s eligibility to extend direct sops to exporters coming under the World Trade Organisation (WTO) scanner, the government is examining the industry’s suggestion of expanding the scope and coverage of the Rebate of State Levies (RoSL), a scheme which does not flout global trade rules as it involves refund of taxes and levies paid by exporters, and is not a subsidy.
“At the consultations between exporters and the government, exporters made a case for extension of RoSL scheme to more sectors as the policymakers are not too keen on giving more direct export subsidies such as the Merchandise Export Incentive Scheme. The suggestion for RoSL extension is under consideration,” a government official said.
The RoSL, a scheme under which exporters can claim refunds from the Centre for all the levies and duties they pay at the State level, is extended only to exporters of apparel and made-ups.
“The textile sector was most vocal about the need to extend the ROSL scheme to other categories as well. The representatives claimed that their exports were under pressure and needed the support,” the official said. The meeting between exporters and officials was attended by representatives of all export promotion councils and bodies.
Exporters argue that due to the current State levies and duties on various products including embedded taxes, a substantial amount of working capital gets blocked and exports becomes uncompetitive. Since the government is not keen on giving more direct export subsidies such as the one given under the MEIS, the ROSL becomes more relevant.
At present, bulk of the incentives to exporters is under the popular MEIS wherein the government gives incentives to exporters equivalent to a certain percentage of their export value in the form of duty credit scrips that can be used to pay customs duties and are freely transferable.
But with the WTO now ruling that since India’s per capita Gross National Income is over $1,000 it is no longer eligible to give direct subsidies such as the ones offered under MEIS, such schemes have to be phased out. “India’s exports have posted a growth of 10 per cent in the first three quarters and there are expectations that exports will touch an all-time high of $325 billion in 2018-19. The government wants to take all steps to ensure that growth doesn’t go off-track,” the official said.