As the world continues to grapple with the economic impact of the ongoing COVID-19 pandemic, governments and industries have been forced to take drastic measures in order to mitigate the financial strain. In this regard, the Indian government has recently announced relief measures for the export sector, which have been well received and widely appreciated by the business community.
The relief measures, which are currently restricted to exporters, aim to provide much-needed respite to businesses that have been severely affected by the pandemic-induced economic slowdown. One of the key measures is a moratorium on/deferment of payment of all term loans and recovery of interest on working capital loans, falling due between September 1 and December 31, 2025. This move is expected to provide significant relief to exporters who have been struggling to meet their financial obligations amidst a sharp decline in demand for their products.
Another important relief measure announced by the government is the extension of the Interest Equalization Scheme (IES) for pre and post-shipment rupee export credit. Under this scheme, the government provides interest subvention to banks to encourage them to lend to the export sector at competitive interest rates. The extension of this scheme till March 31, 2022, is expected to provide much-needed liquidity support to exporters and help them stay afloat during these challenging times.
In addition, the government has also announced various other relief measures, including an increase in the scope of the Export Credit Insurance Scheme (ECIS) to cover both pre and post-shipment credit and exporter’s realisation of export proceeds in Indian Rupees. This is expected to provide a much-needed safety net to the export sector, which has been struggling with payment delays and defaults by foreign buyers.
The government’s decision to fast track all pending income tax refunds is another welcome move, which is expected to provide a major boost to the liquidity of exporters. This will help them meet their immediate financial requirements and continue their operations without facing any undue financial burden.
The announcement of a revised priority sector lending (PSL) norms for exports is also expected to provide the necessary financing support to the export sector. Under the new norms, banks will be required to allocate 5% of their PSL funds to export credit, which will help increase the flow of credit to this crucial sector. This move is expected to provide a major boost to the export sector, which had been grappling with a liquidity crunch even before the pandemic.
Perhaps the most significant relief measure announced by the government is the provision of a new scheme for the reimbursement of duties and taxes on exported products (RoDTEP). Under this scheme, exporters will be refunded the various taxes and duties that are not being reimbursed under any other existing scheme. This is expected to greatly improve the competitiveness of Indian products in the global market.
The government has also extended the validity of the Advance Authorization and Export Promotion Capital Goods (EPCG) scheme till March 31, 2021, with enhanced benefits. These schemes aim to incentivize exports and help exporters procure inputs without paying any duties, thereby making their products more competitive in the international market.
Overall, the relief measures announced by the government for the export sector are a major shot in the arm for businesses that have been reeling under the economic impact of the pandemic. By providing a moratorium on/deferment of payments, extending the Interest Equalization Scheme and Export Credit Insurance Scheme, and introducing new schemes, the government has taken a comprehensive and proactive approach towards reviving the export sector.
These measures will not only provide immediate relief to exporters but also help them recover and get back on track in the long run. This, in turn, will have a positive impact on the overall economy by boosting exports and creating more employment opportunities.
In conclusion, while the COVID-19 pandemic has brought about numerous challenges and uncertainties, the Indian government’s timely and effective relief measures for the export sector have instilled a sense of hope and confidence among businesses. These measures demonstrate the government’s commitment towards supporting the export sector and reaffirm its vision of making India a global economic powerhouse. With all these measures in place, India’s export sector is poised to emerge stronger and more resilient than ever before.
