Published On : 09-Feb-2023
India’s budget was released last week amidst great anticipation from the public and the business community. The budget has come at a time when markets around the world are seeing some of the highest levels of volatility in recent years though India is faring better than most. India will impact global import export data as budget 2023-24 looks to spur export production and reduce reliance on imports.
The Commerce and Industry Ministry’s flagship schemes for the Indian import export community were given year-on-year budgetary hikes. The Remission of Duties and Taxes of Export Products (RoDTEP) budget was hiked by 10%. While the Rebate of State and Central Taxes and Levies (RoSTCL) scheme was hiked by 11%. Export credit assistance was also given a boost. MSMEs stand to gain the most from these developments.
Subsidy on lithium-ion batteries for the EV manufacturing industry has been extended by a year. The government is keeping up its push in helping electronic vehicles reach the farthest corners of the country. Duty has also been reduced for electronic parts, apparel, cocoa, food spices, chemicals, diamonds, and steel scrap. While levies on precious metals and rubber have been increased to spur domestic production and narrow India’s trade deficit. The Federation of Indian Export Organization has said that the budget seeks to make India’s exports more competitive and also gives priority to import substitution. The budget also makes cuts in the Production Linked Incentive (PLI) scheme to correct the current account deficit while shifting focus on improving necessary systems.
The Commerce and Industry Ministry had requested the Finance Ministry to decrease import duty on precious metals. This was intended to uplift India’s status as a hub for jewelry repair. Although, India is already the world’s largest importer of gold. The commodity is said to have widened the country's Current Account Deficit (CAD). However, upon the budget’s release, we discovered that the government had indeed increased import duty. This is seen as a step to narrow the current account deficit.
India’s export volume is steadily growing at 14-15% annually even when markets around the world face difficult challenges. India’s Foreign Trade Policy for 2015-20 was extended in September 2022 for six months. The next Foreign Trade Policy is expected to come out in March 2023. India’s trade deficit doubled to $27.98 billion due to COVID-19-related disruptions. Export promotion councils supported the Indian government's decisions to go forward with the extension.
