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Home Economy and Finance Mega shopping festivals to taxation incentives, FM Nirmala Sitharaman announces comprehensive measures to boost...

Mega shopping festivals to taxation incentives, FM Nirmala Sitharaman announces comprehensive measures to boost export and housing sector

The government's specific focus is on lifting the exports and real estate sectors which have been the worst hit in the economic slowdown.

In a press conference convened by the Finance Minister of India, Nirmala Sitharaman today announced a plethora of measures to restore dwindling confidence of people in the Indian economy and arrest the slump. The government’s specific focus is on lifting the exports and real estate sectors which have been the worst hit in the economic slowdown.

Being optimistic about the economy, Sitharaman stated that the government has been able to control the inflation which is just under 4 per cent. She also asserted that the Annual Investment Rate is going up and the signs of economic revival are palpable and very encouraging. Finance Minister is also set to meet the heads of the public sector banks on September 19. She has assured that there has been an increased flow of credit from the banks in the last few weeks. In a big relief for small taxpayers, Sitharaman declared that small taxpayers with marginal default will not be prosecuted.

For addressing issues of economic woes in the Exports and Housing Sector, Nirmala Sitharaman listed down comprehensive steps to be initiated by the government to invigorate growth in these sectors. The steps are:

New measures adopted by the government to boost exports:

  1. Extend the scheme of Reimbursement of Taxes and Duties for Export promotion: The government has decided to extend the scheme of Reimbursement of Taxes and Duties for promoting exports. The finance minister has announced new scheme-Remission of Duties and Taxes on Export Products to replace the existing all Merchandise Exports from India Scheme (MEIS) from January 1, 2020. Existing MEIS and old ROSL in textile to continue till December 31, 2019.
  2. Fully automated electronic refund route for Input Tax Credit in GST: The second measure to be adopted by the government in boosting exports is ‘Fully automated electronic route for Input Tax Credit(ITC) in GST’. The finance minister emphasises that the fully electronic refund module for a quick and automated refund of Tax Credit will be implemented later this month. “There will be the total removal of human interface in tax assessment,” the finance minister said.
  3. Expanding the scope of Export credit Insurance Scheme(ECIS) by ECGC: In its third step to goose exports, the government has taken the decision of expanding the scope of Export Credit Insurance Scheme(ECIS) by Export Credit Guarantee Corporation (ECGC). The ECGS will offer higher insurance cover to banks lending working capital for exports. The Premium incidence for MSMEs will be moderated suitably. The move aims to enable a reduction in the overall cost of export credit including interest rates.
  4. Revised Priority Sector Lending norms for Export Credit: Priority Sector Lending(PSL) norms for Export credit have been evaluated and enabling guidelines are under consideration of the RBI. This will provide an additional corpus of Rs 36000 crores to Rs 68000 crores as export credit under the priority sector.
  5. Effective monitoring of Export Financing by Department of Commerce: The government plans to monitor Export Finance with the help of an Inter-Ministerial Working Group in the Department of Commerce, tracked through a dashboard, reviewed with institutions and interventions will be carried out as and when needed.
  6. Leverage technology to reduce “Time to Export or Turn-around time”: Technology will be used further to reduce the time to export and for completion of seamless process digitisation of all export clearances. An action plan to reduce time to export/turn-around time at the airports and ports in accordance with the international benchmark will be implemented by December 2019. Airports and ports will be informed of their actual turn-around time to prod them into improving their performance. An Inter-Ministerial Group will overlook this.
  7. Annual Mega shopping festivals: Annual Mega shopping festivals will be organised in 4 places in India by March 2020 with 4 themes(G&J, Handicrafts/Yoga/Tourism, Textiles and Leather).
  8. Special FTA Utilisation Mission: A senior officer in the Department of Commerce will preside over FTA Utilisation Mission which will work exclusively with FIEO and export houses to utilise concessional tariffs in each FTA. Specific goals will be set for FTA utilisation and an effective FTA monitoring system will be established.
  9. Online “Origin Management System”: An Online “Origin Management System” will be launched in the next few weeks to help the exporters get the Certificates of Origin-CoO by DGFT in collaboration with Exports Inspection Council.
  10. Time-Bound adoption of mandatory Technical Standards: The government has committed to time-bound adoption of all necessary technical standards to improve the performance ecosystem and quality, inculcate competitiveness and tackle the issue of substandard exports. A Working Group of Standards will be set up in the Department of Commerce to create a blueprint of implementation of Standards, timelines and enforcement. This is aimed at providing a big boost to the Indian products over non-tariff barriers in export.
  11. Affordable Testing and certification infrastructure: Affordable testing and certification will be developed in India in PPP mode to aide exporters in getting all the internationally accepted tests and certification to be done in India.
  12. Enable the handicrafts industry to effectively harness e-commerce for exports: Special exemption will be provided for facilitating and on-boarding handicrafts artisans and cooperatives on e-commerce portals and enable seamless export.

New Measures adopted to boost Real Estate Sector:

  1. Relaxation of ECB guidelines for Affordable Housing: In consultation with the RBI, the government proposes to ease the ECB guidelines to enable financing of home buyers for people who are eligible under Pradhan Mantri Awaas Yojana(PMAY).
  2. House Building Advance: The interest rate on House Building Advance will be lowered and connected to the 10 year G Sec yields. The government believes that this move will encourage more government employees to buy new houses.
  3. Special Window for affordable and middle-income Housing: The government will provide a special window for last-mile funding for housing projects which are non-NPA and non-NCLT projects and are Net worth positive in the affordable and middle-income category. The primary objective to focus on the construction of the unfinished units. The government of India, similar to NIIF, will contribute to the fund while the rest of it will be invested by LIC and private capital from banks/sovereign funds/DFIs etc. Rs 10000 crore to be invested by the government, while the approximately same amount will come from the outside investors.

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