Suresh Prabhu seeks higher sops to push farm, services exports

NEW DELHI: Commerce and industry minister Suresh Prabhu has written to finance minister Arun Jaitley seeking higher export incentives to promote exports of agricultural products under the Merchandise Exports from India Scheme (MEIS) as well as additional outlay for a scheme to boost services exports whose growth has slowed in the current fiscal.
The ministry has sought extra outlay of Rs 1,500 crore under the MEIS to fulfil the government’s commitment of doubling farmers’ income and promote exports of agricultural products.

It wants the government to introduce a 10% incentive on rice exports, commensurate with rise in minimum support price to make the commodity competitive in international markets.

For making customs duty payment, importers can use MEIS scrips, which are either received from government against exports as incentives or importers can purchase them from other exporters.

The commerce department has also requested for the incentive on all oil meals to be hiked to 10% as currently it is allowed only on soya meals.

“This is required in view of competitive disadvantages being faced by our exporters vis-a-vis exporters of competing countries having free/preferential trade agreements with these importing countries,” as per the letter, which ET has seen.

For the services sector, Prabhu has requested an enhancement in allocation to Rs 10,000 crore from the current allocation of Rs 2,640 crore to promote services and push its growth to double-digits in view of “creeping protectionism globally and trade tensions among major economies like US, China and EU”.

Services exports grew 6.41% in 2016-17 and 18.81% in 2017-18. However, in the April-June quarter of the current fiscal, the growth has only been 4.9%.

The commerce department has pushed for incentive rates under the service exports from India scheme to be increased to flat 10% from 5-7% at present besides expanding its coverage to export-oriented units, software technology parks of India and air transport services, on the lines of maritime transport services. The proposed higher allocation would cover all these expansions.

Easing GST constraints
Prabhu has asked the finance ministry to look into retrospective amendments covering EPCG holders, advance licence holders, export-oriented units and merchant exporters making them ineligible to claim integrated goods and services tax (IGST) refund on exports as these are “restrictive provisions”.

He has sought a removal of pre-import condition for availing exemption of IGST and cess on advanced authorisation licenses as it is causing capital blockage for exporters and exemption for deemed exports from the whole of integrated tax and compensation cess, similar to physical exports.

As per Federation of Indian Export Organisations, almost Rs 21,000 crore worth of GST refunds are stuck with the government.

Rupee payment mechanism
The minister has proposed rupee payment mechanism for exports to Iran, Russia and Venezuela from the perspective of issues related to current account deficit and to enable long-term business with buyers of these countries.

India has pending payments with Venezuela worth $648 million pertaining to oil dividend payments due to OVL and pharma companies. India’s petroleum imports can provide the rupee credit required by Venezuela, according to the letter.