Commerce ministry mulls incentives for states promoting exports

The commerce and industry ministry is mulling incentives for states which play a proactive role in promoting exports as it will help boost economic growth, union minister Suresh Prabhu on Monday said.
He said that he has sought the views of states on the issue, which was raised during the third meeting of council for trade development and promotion.
“We are thinking of ideas whereby we can incentivise the states which promote exports. I have mooted this idea before the states and asked them to give their ideas on this,” Prabhu told reporters in New Delhi.
Trade contributes significantly in boosting the country’s economic growth, the commerce and industry minister said.
If the GDP of states rises, it would push the country’s growth, he said, adding that the focus should also be on the districts’ GDP, which in turn would fuel the nation’s economy.
Prabhu said that the ministry is in the process of preparing a strategy to promote overall exports and push the country’s industrial growth.
When asked about the concerns raised by exporters in the meeting related to goods and services tax (GST) refund, he said that the issue was discussed and the ministry is working on an e-wallet system to resolve the matter.
Before the implementation of the GST last July, exporters used to get ab-initio exemptions from duties. But, now they have to pay first and then seek refund. Due to this process, the Federation of Indian Export Organisations (FIEO) has stated that about Rs 1,85,000 crore will get stuck with the government.
Under the proposed system, according to FIEO, the problem of liquidity will be solved as exporters may use it like a running account where money will be debited from e-wallet when duty paid supplies have to be undertaken and the amount will credited when the proof of exports is made available.
The other issues which came up for discussion during the council’s meeting include role of foreign direct investment in promoting exports and enhancing role of states to push shipments.
During the meeting, Prabhu said, Goa chief Minister Manohar Parrikar suggested that all states prepare their export policies. So far, only 14 states including Gujarat, Tamil Nadu, Tripura and Jammu and Kashmir have done that.
FIEO president Ganesh Kumar Gupta suggested exemption from electricity duty under the GST regime and transport subsidy to increase competitiveness.
The council was constituted on 3 July, 2015 to ensure a continuous dialogue with states and union territories on measures for providing an international trade enabling environment, the commerce ministry said in a statement.
Members of the council also deliberated on creating a framework for making the states active partners in boosting exports.
The state ministers of commerce and industry, secretaries of central departments and heads of other export related organisations are the members of the council.
The country’s merchandise exports during April-November 2017-18 increased by 12.01 per cent to USD 196.48 billion.
On GST refund, Prabhu said the solution “lies in the fact that, you [exporters] do not have to first pay and then claim refund. So, we are working on e-wallet system, which will not require exporters to pay and then seek refund”.
On incentivising states to promote exports, he said their full participation is important to push India’s outbound shipments.
The ministry also asked the states to participate in the trade infrastructure for export scheme.
So far, detailed project reports have been received from Karnataka, Tamil Nadu, Madhya Pradesh, Andhra Pradesh and Tripura only.
Later, an official statement said that Prabhu called upon states to explore ways of tapping into global trade by promoting services exports, organic farming, value addition to agricultural products, utilisation of the benefits accorded to the SEZs and creating employment.
He said there was a need to develop state and district level strategies.
Besides Parikkar, deputy chief minister of Gujarat Nitin Bhai Patel, ministers from 11 states, senior state government officials and industry bodies attended the meeting.
In the meeting, Parikkar raised the issue of imposition of five per cent duty on import of raw cashew.
Patel said that frequent changes in the export regulations cause hardship to exporters as this renders existing contracts infructuous.
He suggested of providing agri-product exporters subsidy on the lines of MSP support provided to farmers.
R V Deshpande, Karnataka’s large and medium scale industry stated that there is a need to unify refund of commercial tax and duty drawback.