Union Finance Minister Nirmala Sitharaman presented the budget 2021-22 in parliament on 1st Feb, the Ministry had taken suitable action to prevent the total collapse and in the process helped the economy to revive to some extent and monitored the pandemic situation. Under these critical circumstances, budget preparation was a great test in itself and the Government has taken some major steps to boost the exports from the country by promoting it in International Market and curbing imports and there were 09 major announcements for the Export-Import sector in Union Budget 2021-22. In this article, we are going to understand the announcements and Union budget impact on Import-Export Industry.
Watch the short video we have prepared giving a complete understanding of the impact of Union budget 2021-22 on the Import-Export sector of India and major announcements for the sector:-
Union Budget Impact on Import-Export and Major Announcements
Withdrawal of IGST refund facility
The Government of India is planning to withdraw the IGST refund facility for exporters which is the first major change that is proposed in the finance bill 2021,
At present there are below two options for carrying out the export activities:
• Export under LUT and claim a refund of Input Tax credit (ITC) from the GST Department.
• Export on payment of IGST from the accumulated credit and get IGST refund from Customs department.
The majority of exporters were using the second option as it was comparatively easy and with less documentation. However due to increasing cases of GST fraud, the Govt. is planning to scrap the IGST refund facility and give only one refund option to exporters.
So If the Finance Bill, 2021 gets passed in Parliament, the exporter will have to compulsory export under LUT and claim a refund of Input Tax credit (ITC) from the GST Department. And only a specific class of exporters or goods as notified will be allowed an IGST refund.
Confiscation of export goods if a wrongful claim is filed
A sub-section is proposed to be inserted in section 113 of the Customs Act, which states that export goods are liable for confiscation if a wrongful claim is filed under any of the schemes like remission or refund of any tax/duty/levy. So exporters need to be more careful about the filing of their claim and must ensure proper classification of goods.
New Export Incentive Scheme (RoDTEP Scheme)
On 13th March 2020, The Union cabinet approved RoDTEP Scheme and announced to allocate Rs 50,000 Cr to incentivize but the Government has decided to allocate only Rs 13,390 crores towards the RoDTEP scheme for the FY 2021-22 which is a major blow to exporters.
Pending Claim under MEIS/SEIS Scheme
There was no update regarding the stuck/pending claims of both Merchandise Exports From India Scheme (MEIS Scheme) and Service Exports From India Scheme (SEIS Scheme)for FY 2019-20 & 20-21.
PLI (Production Linked Incentive)
In order to boost domestic manufacturing and cut down on import bills, the central government in March 2020 introduced the PLI scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units. Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units. The government looks to spend Rs 1.97 lakh crore on various PLI (Production Linked Incentive) schemes over the next 5 years for about 13 different sectors announced in the budget speech of FY 2021-22. On November 11 GoI approved below 10 sectors under Production Linked Incentive Scheme. Visit DGFT Website to get more updates on PLI Scheme -( https://www.dgft.gov.in/CP/)
Advance Chemistry Cell (ACC) battery
Electronics and technology products
Automobiles and auto components
Pharmaceuticals and drugs
Telecom and networking products
Textiles products
Food products
High-efficiency solar PV modules
White goods
Specialty steel
Scheme for Textile Sector
A scheme for Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme to enable the textile industry to become globally competitive; the scheme will create world-class infrastructure with plug-and-play facilities to enable create global champions in exports. 7 Textile Parks will be established over 3 Years.
Port Privatization
Seven major ports to be privatized under Public-Private partnership (PPP mode). Some of these ports will include Kandla, JNPT, Chennai, Visakhapatnam, Kolkata, etc.
Import Duties on various products
The Budget reduced the Import duties on many iron & steel products, including steel scrap/ copper scrap. On the other side, it increased custom duties on various Auto parts. Import duties on Gold/Silver were cut from 12.5% to 7.5%.
Custom Duty Rationalization
Union Finance Minister Nirmala Sitharaman announced that from 01st Oct 2021, they will put in place a revised Customs Duty structure which will be free from distortions and proposed to review more than 400 old exemptions this year. She remarked that “Our Custom Duty policy should have the twin objective of promoting domestic manufacturing and helping India get on to global value chain. The thrust now has to be on easy access to raw materials and export of value-added products.”
Who Are We and how we can help you?
We at Afleo Consultants are India’s leading Export Import Consultants, having rich experience of 10+ Years in the domain. We specialize in GST Refund from GST Department, all the DGFT related matters, Export promotion schemes such as RoDTEP, MEIS, SEIS, Advance License, EPCG, AEO certification, Star Export House certification, Duty Drawback, etc.
