Budget 2025 Expectations

In a move to bolster the export sector, Finance Minister Nirmala Sitharaman is anticipated to enhance the financial allocations for two pivotal tax remission schemes by nearly 10% each in the upcoming Union Budget 2025-2026. This strategic decision aims to support exporters amidst fluctuating global demand and to align Indian exports with international standards.

The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, which received an allocation of Rs 16,575 crore in the July 2024 budget, alongside the Rebate of State and Central Taxes and Levies (RoSCTL) with Rs 9,246 crore, are set for a significant boost. These schemes are crucial for reimbursing exporters for various taxes and levies, thereby promoting a zero-rated export environment.

Addressing the Shortfall

With an increased demand for tax remission, the expenditure department is scrutinizing a proposal to allocate additional funds for the RoDTEP scheme this fiscal year, aiming to cover a Rs 1,800 crore shortfall. This initiative underscores the government's commitment to sustaining export growth and competitiveness on the global stage.

Expanding Support

Further discussions are underway to extend the RoDTEP support to companies in special economic zones (SEZs) and export-oriented units, alongside prolonging the interest equalisation scheme beyond its December 2024 deadline. These measures are expected to provide a much-needed impetus to the export sector, especially in light of the potential opportunities arising from the ongoing US-China tariff war.

Export organizations have been vocal about the necessity for increased governmental support to navigate the challenges posed by demand slowdowns in advanced economies and to capitalize on emerging opportunities.