Govt Asks States to Refund Levies to Promote Exports

The Centre is nudging states to refund levies, such as value added tax (VAT) on fuel and fees paid at agriculture produce marketing committees (APMC), to make exports more competitive in global markets.

The suggestion to reimburse the taxes and other fees paid by exporters was made by the Directorate General for Foreign Trade during the board of trade meeting last week as the government wants states to be equal partners in exports. The presentation came days before the much-awaited Foreign Trade Policy is due to be unveiled, which is expected to provide thrust to the “districts as export hubs initiative”.

Exporters have complained of having to bear taxes and levies, which make their products less competitive in the global markets, especially when interest and logistics cost are higher in India.

At the board of trade meeting, chaired by commerce and industry minister Piyush Goyal, it was proposed that states diversify their export basket as it will also help stabilise their export earnings, while focusing on improving the quality of goods and services. Two case studies were discussed where it was pointed out that UP could look at high-value products such as pharma and electronics components, while Tamil Nadu could add pharma, marine products and electronic and white goods to automobiles and garments.

Among the “expectations from states” is creating the mechanism to support the export ecosystem, given that many states still look at exports as the Centre responsibility. States have been told to undertake a gap analysis related to infra and logistics to identify if inland container depots are adequate and if the road infra is robust and is adequately linked to ports.