Govt to get rid of the incentive plan for services exporters

The government has planned to get rid of the incentives to services exporters under the flagship Services Exports from India Scheme (SEIS). The next FTP or foreign trade policy will include this scheme or replace it in SEIS and whether it will be executed from the next fiscal year will be known only in March 2023 when it will be unveiled. The govt. is also refraining from giving the SEIS benefits to the exporters for the financial year 2022 due to limited resources. As per the sources, the service exporters are doing well without the incentive hence the support would be provided to those players who require support, still the government is likely to provide assistance to service exporters for marketing of select services overseas to help grab orders in the next FTP.

The trade experts say that the previous year, the government declared support of Rs. 10,002 crore to clear the dues under SEIS till the financial year 2021, however, the actual outgo under SEIS would have been around Rs.4000 crore a year. It is also important to know that the MEIS (Merchandise Exports from India Scheme) is being replaced by a brand new tax remission scheme RoDTEP from January 2021, but no such replacement is given for the service exporters. The government is planning not to extend the incentives while the service exporters are showing a good performance than those of goods, even though there is a slowdown in advanced markets.

As per the data, in the first half of this year, the service exports showed a jump of 28% to $150 billion. On the contrary, the merchandise exports jumped 17% to $232 billion due to the decent expansion in the first quarter.
A recent survey by RBI recommended that the US, Canada, and Europe made up 61.2% and 25.6% respectively of India’s exports of software & ITeS–the major services segment–worth $118 billion in FY19. In the mid-term review of the current FTP, the government had, in December 2017, declared added incentives worth Rs 8,450 crore a year to increase both merchandise and services exports.