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India: Key export tax refund scheme extended, aid to shipping cleared

The government extended the validity of a key tax refund programme for garments and made-up exporters and rolled out a Rs 1,624-crore subsidy scheme for the shipping industry over five years, as it sought to offer further assistance to the sectors that have been hit hard by the pandemic.

The Cabinet committee on economic affairs also approved the merger of all schemes in the animal husbandry sector under three broad categories and envisaged a spending of Rs 9,800 crore over five years (starting from FY22). The additional allocation on top of the existing budgetary outlay wasn’t immediately clear. However, the government aims to draw investments worth Rs 54,618 crore into the sector over five years.

To ease liquidity flow for garment and made-up exporters, the validity of the Rebate of State and Central Taxes & Levies (RoSCTL) scheme has been extended by over three years through March 2024. With this, the government also junked an earlier plan to replace the RoSCTL with the Remission of Duties and Taxes on Exported Products (RoDTEP), which is expected to be operationalised soon.

Under the RoSCTL scheme, garment exporters get scrips of up to about 6% of the freight-on-board value of the products and made-up exporters are entitled to a maximum of 8.2%.

However, exporters of the textiles products that are not covered under the RoSCTL scheme will get the RoDTEP benefits, along with those of goods in other sectors.

The scrips are to reimburse the exporters for various embedded taxes and levies (not subsumed by GST) contained in the exported product to keep such exports zero-rated, in sync with global best practices. Exporters can use this scrip to pay basic customs duty for the import of equipment, machinery or any other input.

Hailing the move, A Sakthivel, president of the exporters’ body FIEO, said the move “provides stability and predictability, which augurs very well for the long-term contracts thereby ensuring additional investment in the segment and creating new employment opportunities in the sector”.

The Cabinet approved a scheme to promote flagging of merchant ships in India by offering subsidy to domestic shipping companies in global tenders floated by ministries and central public sector enterprises. The move will promote investments in Indian flagged vessels. It was announced as part of the Budget for FY22.

Under the scheme, for a new ship, which is less than 10 years old on the date of flagging in India, the assistance will be 15% of the lowest quoted offer by a foreign flagged company in a tender. This subsidy for a 10-20-year-old ship will be to the tune of 10%. Once the scheme is launched, this subsidy rate will be trimmed by 1 percentage point every year until it reaches 10% and 5%, respectively.

The government also said the decision to revise and realign various components of officials schemes in the animal husbandry sector will further boost growth and make it more remunerative for 10 crore farmers. India is the world’s largest milk producer with an annual output of 198.4 million tonne in FY20.

The three identified broad categories are — Rashtriya Gokul Mission, National Programme for Dairy Development (NPDD) and National Livestock Mission (NLM).

However, there will be several sub-schemes such as Livestock Census and Integrated Sample Survey (LC & ISS), Livestock Health and Disease Control (National Animal Disease Control Programme merged), Infrastructure Development Fund (after merger of Animal Husbandry Infrastructure Development Fund and Dairy Infrastructure Development Fund).
Source: Financial Express

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