Budget 2020: Govt to launch scheme for exporters to reimburse state levies this year, says FM Sitharaman

With an aim to boost dwindling outward shipments, Finance Minister Nirmala Sitharaman on Saturday said a scheme for exporters will be launched this year to reimburse taxes and duties paid by them.

It is proposed to digitally refund to exporters, duties and taxes levied at the centre, state, and local levels, she said while presenting the Union Budget for 2020-21.

These taxes include value added tax (VAT), electricity duties and fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism.


This scheme for remission of duties and taxes on "exported products will be launched from this year itself," she said.

The move assumes significance as merchandise export from India scheme (MEIS) was not in compliance with global trade rules.

Under the World Trade Organisation (WTO) rules, certain duties like state taxes on power, oil, water, and education cess are allowed to be refunded).

She also said that to develop each district as an export hub, "efforts of the centre and state governments are being synergised and institutional mechanisms are being created in order that every district becomes an export hub".

The country's exports contracted for the fifth month in a row by 1.8 per cent in December 2019 to USD 27.36 billion.

Imports too declined by 8.83 per cent USD 38.61 billion, bringing down the trade deficit to USD 11.25 billion during the month under review. The trade deficit during December 2018 was USD 14.49 billion.

During April-December 2019-20, exports slipped 1.96 per cent to USD 239.29 billion, imports declined by 8.9 per cent to USD 357.39 billion, leaving a trade deficit of USD 118.10 billion.