ArticlesStrengthening India's Export Hub Status: Budget 2023 Highlights

Indian Economy

Strengthening India's Export Hub Status: Budget 2023 Highlights

Nirmala Sitharaman's 2023 Budget boosts India's economy as an exporter.

By India Index

4 min read

Indian Finance Minister Nirmala Sitharaman recently announced the National Democratic Alliance (NDA) government’s highly anticipated budget to mixed reactions. While there aren’t any targeted measures to enhance exports, several indirect measures have been introduced to boost domestic manufacturing and exports.

Helping Hand to Electronics Manufacturing

The government’s focused efforts on the mobile phones industry have already transformed the nation from a prominent importer of mobile phones (till 2018) to a net exporter of these products. The announcement of the reduction and relaxation of duties on certain components for mobile phones and televisions will only serve to aid these industries, making manufacturing more cost-competitive and strengthening India's status as an export hub for mobile phones.

Shine on Lab Grown Diamonds

India's exports of polished lab-grown diamonds increased over 20-fold from 2015-16 to 2021-22, but the country remains heavily reliant on imported rough lab-grown diamonds. To reduce this dependency, the government is removing custom duty on the seeds that are used for the production of lab-grown diamonds. Another significant step is the provision of a 242 crore grant to IIT Madras for research and development on lab-grown diamonds.

While presenting the budget, Nirmala Sitharaman commented on this “innovation-driven emerging sector”, emphasizing its high employment potential as well.

Fishy Business

India is the second biggest exporter of shrimps - which make up 67% of the nation's seafood exports valued at $7.8 billion. To bolster exports and make the shrimp industry more competitive, the government has reduced the import duty on fish meals from 15% to 5%. This move will greatly benefit the industry for fish meals make up 40% of the cost of production of shrimps.

Supporting Schemes

Various schemes announced in the budget have been deployed to aid exports. For instance, the allocations for the Remission of Duties and Taxes on Export Products (RoDTEP) scheme, as well as the Rebate of State and Central Taxes and Levies (RoSCTL) scheme, have both been increased–the former by 10% and the latter by 12%. Both programs aim to repay exporters for the non-refundable taxes and levies paid on inputs at the central, state, and local levels. Earlier, these taxes were not refunded.

The government has also announced a new and improved credit guarantee program for MSMEs (Micro, Small, and Medium Enterprises), which will be launched on April 1st with a budget of Rs 9,000 crore.

Further, on popular demand from exporters, the interest equalization scheme has been allocated a 23% rise in funding, which has the potential to boost exports.

India has established itself as a booming and fast-growing economy in the world with Morgan Stanley reporting the nation is “on track to become the world’s largest economy by 2027”. The measures introduced in the budget will strengthen India’s position in the global economy and uplift India’s status as an export hub.

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