Budget 2025 expectations: In the upcoming Union Budget 2025-2026, finance minister Nirmala Sitharaman is expected to increase fund allocations for two major tax remission schemes for exporters by almost 10 per cent each, according to sources familiar with the matter, cited by ET.
In the July 2024 budget, Rs 16,575 crore were allocated for the Remission of Duties and Taxes on Exported Products scheme (RoDTEP) for the current fiscal. Another Rs 9,246 crore were set aside exclusively for the Rebate of State and Central Taxes and Levies (RoSCTL), aimed at supporting textile and garment exporters.
The expenditure department is also reviewing a proposal from the commerce department to allocate additional funds for the RoDTEP scheme this fiscal. This move seeks to address a Rs 1,800 crore shortfall caused by increased demand for tax remission.
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These remission schemes allow the government to reimburse eligible exporters for state and central taxes and levies on inputs used in the production of exported goods. The goal is to align exports with the global best practices, at zero rate.
A senior official told the financial daily that a decision on the proposal can be expected soon.
The expenditure and commerce departments are also in the process to extend RoDTEP support to companies in special economic zones (SEZs) and export-oriented units, and the interest equalisation scheme beyond its December 2024 deadlines, another official said.
Export bodies have voiced for increased support from the government to counter the demand slowdown in certain advanced nations.
They have also asserted the need for assistance to leverage on potential opportunities that could arise for India amid the tariff war between US and China during Trump’s second tenure.
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The exact figures of the refunds under the remission schemes would differ, depending on the type of products.
For example, eligible exporters under the RoDTEP scheme receive reimbursements ranging from 0.3 per cent to 4.3 per cent of the freight-on-board value of their exported products.
This year, merchandise exports marked an annual surge of 1.6 per cent, reaching $322 billion. Last year in October, global organisation WTO had projected that world wide trade volume could go up from 2.7 per cent to 3 per cent in 2025, in case the West Asian conflict was resolved.
In the pre-budget meeting with FM Nirmala Sitharaman last year on December 26, the export bodies called for sustained government support to counter external challenges.
Ashwani Kumar, president of Indian export organizations, also emphasised potential export opportunities during the anticipated tariff war, which would worth $25 billion to the US across sectors such as electronics and electricals, auto parts, chemicals, and apparel and textiles.
