Budget 2022: Exporters await with scepticism and cautious optimism

In August 2020, the Refund of Duties and Taxes on Export Products (RoDTEP) scheme was touted as a Rs 50,000 crores package. The allocation for the scheme in last year Budget was only Rs 12,500 crores. The scheme was introduced from the beginning of last calendar year but the RoDTEP rates were announced only in September 2021. The items falling under Chapters 28, 29, 72 and 73 and exports made under advance authorisation scheme and by export oriented units and units in the Special Economic Zones (SEZ) are not covered under the scheme. Since last few days, the Customs have stopped generating the scrolls for grant of RoDTEP duty credits in the electronic credit ledgers of the exporters.

The facility for filing the applications under the Merchandise Exports from India Scheme (MEIS) was disenabled in July 2020 and restored in September 2021. The entitlements for exports made during October-December 2020 were cut drastically. After granting the duty credit scrips for a while, the facility for filing the MEIS applications for that quarter has been disenabled.

Similarly, the allocations under the Served from India Scheme (SEIS) for the year 2019-20 were also capped and restricted to fewer sectors. The Budget 2021 envisaged higher allocations under the interest subvention scheme but the Reserve Bank of India has not yet issued any notification extending the scheme beyond end September 2021. In 2014, the government said that logistics costs in India are about 14% compared to about 8% in the developed countries. Almost 8 years later, the government is saying the same thing.
 

So, the exporters are rather apprehensive that no matter what the announcements and allocations in the Budget, the actual delivery of the benefits will be constrained by the extent of funds available. They expect that the social sector will get priority given that the poorer sections of the society that have suffered heavily during the pandemic need to be supported.  

The SEZ units expect changes in laws that will mandate payment duty on the inputs rather than payment of duty on the final products when they clear goods in the domestic tariff area. The government is also expected to notify the Shipping Bill (Post Export Conversion in relation to Instrument based scheme) Regulations and amendments to the Customs (Import of Goods at Concessional Rate) Rules, 2017, as per the draft put up for stakeholder consultations a few weeks back.

In 2021, the economy rebounded strongly from the lows of 2020 thanks in no small measure due to export growth. Strong demand from the developed economies helped the exports reach nearly US$ 300 billion in the April-December period despite soaring commodity prices, supply side disruptions and high transportation costs. However, the overall sea cargo tonnage is almost at the same levels as in the pre-pandemic 2019.

The global economic growth may moderate during 2022 mainly due to gradual withdrawal of the fiscal stimulus and hardening of interest rates in the developed countries. However, the port congestion and container availability may ease and the ocean freight rates may come down this year. The supply side constraints may be less and the commodity prices may come down. Also, the worst of the pandemic may be over. So, there are enough grounds to be cautiously optimistic.

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