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Budget 2025: Key Export-Related Announcements

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Driving Export Growth through Policy Reforms

The Union Budget 2025 presents a strategic vision for boosting exports, with a particular emphasis on MSMEs, infrastructure, digital trade facilitation, and sector-specific incentives. Recognizing that MSMEs contribute 45% of total exports, the government has introduced measures to ease credit access, streamline trade documentation, and enhance sectoral competitiveness. Below are the key highlights from the latest budget that will impact Indian exporters:

Key Highlights

  1. Strengthening MSME Exports
    • Investment and turnover limits for MSME classification have been enhanced to 2.5x and 2x, respectively.
    • Well-performing exporter MSMEs will have access to term loans up to ₹20 crore to boost their business expansion.
  2. Sector-Specific Export Incentives
    • Footwear & Leather Sectors: Expansion of the Focus Product Scheme to facilitate exports worth ₹1.1 lakh crore.
    • Handicrafts Sector: The export period is extended from 6 months to 1 year, with an additional 3-month extension if required. Also, 9 new items are added to the duty-free input list.
    • Crust Leather: 20% export duty exemption to support small-scale tanners and exporters.
  3. Export Promotion & Ease of Doing Business
    • Establishment of an Export Promotion Mission, jointly led by the Ministries of Commerce, MSME, and Finance, focusing on:
      • Easy access to export credit
      • Cross-border factoring support
      • Addressing non-tariff barriers in overseas markets
    • Launch of ‘BharatTradeNet’ (BTN), a unified digital platform for trade documentation and financing solutions.
    • Development of a national framework to encourage Global Capability Centres (GCCs) in Tier-2 cities to boost trade infrastructure.
  4. Infrastructure & Logistics Support
    • Enhancing air cargo infrastructure and warehousing to support the export of high-value perishable horticulture produce.
  5. Regulatory & Taxation Reforms
    • Introduction of a voluntary declaration system allowing importers/exporters to declare material facts and pay duties with interest but without penalty.
    • Amendment in Schedule III (w.e.f. 01.07.2017): Goods warehoused in Special Economic Zones (SEZs) or Free Trade Warehousing Zones (FTWZs), when supplied before clearance for exports or to the Domestic Tariff Area (DTA), will be treated neither as supply of goods nor as supply of services.
    • Removal of IGCR condition for customs duty exemption on import of seeds for rough lab-grown diamond manufacturing.

The Budget 2025 reaffirms the government’s commitment to strengthening exports by providing financial support to MSMEs, simplifying trade processes, and enhancing infrastructure. The establishment of BharatTradeNet (BTN) and the Export Promotion Mission are expected to streamline trade, while sector-specific benefits, will provide direct advantages to exporters. With these measures, India is set to bolster its position as a global trade leader, ensuring long-term export growth, resilience, and competitiveness.

Revamped Preferential Certificate of Origin (eCoO) 2.0 System

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The Directorate General of Foreign Trade (DGFT) has announced the launch of the revamped Preferential Certificate of Origin (eCoO) 2.0 system via Trade Notice No. 23/2024-25, dated 06th December 2024. This upgraded system aims to streamline the certification process for exporters with user-friendly features and enhanced functionalities.

Key Highlights of eCoO 2.0:

  1. Multi-User Access: Exporters can now assign multiple users/applicants under a single IEC.
  2. E-Signature Options: Aadhaar-based e-signature in addition to digital signature tokens.
  3. Integrated Dashboard: A unified platform for eCoO, Free Trade Agreement (FTA) information, trade events, and more.
  4. Cost Sheet Digitization: Simplified preparation and submission of cost sheets.

Implementation Dates:

  • Exporters can start filing Preferential Certificates of Origin via the new system from 21st December 2024.
  • All data, including non-preferential CoO and e-wallet balances, will be migrated from the legacy platform following the stabilization of the system.

Exporters are encouraged to familiarize themselves with the new system and leverage its advanced features for efficient operations. For detailed information, please refer to the official trade notice and be ready for the new system w.e.f 21st December 2024.

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Interest Equalisation Scheme(IES) gets extension

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The Interest Equalisation Scheme (IES) for Pre- Shipment and Post- Shipment Rupee Credit has been extended for MSME manufacturers for 3 Months upto 31st Dec 2024.

However, the total benefit under the scheme will be restricted to Rs. 50 Lakhs for FY 24-25 till 31st Dec 2024.

Exporters who have already available the benefit of Rs. 50 Lakhs or more till Sept 2024 will not be eligible for the benefit in the extended period.

Exporters can refer to the DGFT Trade Circular No. 18/2024 -2025 Dated 30.09.2024.

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Important Update on Export Policy for Non-Basmati White Rice

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The Directorate General of Foreign Trade (DGFT), through Notification No. 31/2024-25 dated 28.09.2024, has amended the export policy for Non-Basmati White Rice (Semi-milled or wholly milled rice, whether polished or glazed; Other) under HSN Code 1006 30 90. The export status has changed from “Prohibited” to “Free,” effective immediately from 28.09.2024.

Please note, however, that exports are subject to a Minimum Export Price (MEP) of USD 490 per tonne.

For further details, exporters should refer to the official notification available on the following link: DGFT Notification No. 31

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Budget Update 2024

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Hon’ble Finance Minister Smt. Nirmala Sitharaman became the first Finance Minister to present the Union Budget for the 7th time in a row. The Budget 2024 was announced post the General Election and the Government taking back its charge.

We herewith provide Important changes and updates with respect to Exports and Imports for your ready reference.

1. BCD on Shea Nuts reduced to 15%

2. BCD on critical minerals, namely, Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, Potash, REE, Rhenium, Strontium, Tantalum, Tellurium, Tin, Tungsten, Vanadium, Zirconium, Selenium, Cadmium, Silicon other than Quartz & Silicon Dioxide. has been reduced to NIL

3. BCD on following critical minerals, namely, Graphite, Silicon Quartz & Silicon Dioxide has been reduced to 2.5%

4. BCD on Prawn & Shrimps feed and fish feed has been reduced to 5%.

5. BCD on Ammonium Nitrate has been increased from 7.5% to 10%.

6. The tariff rate of CTH 3920 and 3921 has been increased to 15%. Consequently, from
24.7.2024, PVC Flex Films/Flex Banners will attract 25% by virtue of declaration under
Provisional Collection of Taxes Act 2023. However, Notification No 50/2017-Customs
has been amended to maintain the existing rate of 10% on items other than PVC Flex
Films/Flex Banners.

7. BCD on following Cancer Drugs Trastuzumab Deruxtecan, Osimertinib & Durvalumab is fully exempted.

8. BCD has been reduced from 7.5% to 5% on MDI for manufacture of spandex yarn to
rectify duty inversion. This is subject to IGCR condition.

9. BCD on cellular mobile phone has been reduced from 20% to 15%.

10. The exemption entries providing concessional BCD rate to mechanics and die-cut parts of
chapters 39 and 73 has been expanded to include chapter 40, 70 and 76

11. BCD rate on PCBA of specified telecom equipment has been increased from 10% to
15%.

12. The Duty rates on precious Metals have also been revised in the budget.

13. BCD has been reduced on Ferro-Nickel from 2.5% to Nil and The BCD exemption on Ferrous Scrap has been continued upto 31.3.2026.

14. Certain specified capital goods has been added to the list of exempted goods for use in
manufacture of solar cells and modules.

15. The BCD on Garden umbrella has been revised from ‘20%’ to ‘20% or ₹60 per piece,
whichever is higher’

16. The BCD rate on Lab chemicals classified under HS 9802 00 00 has been increased from
10% to 150%

17. There has been a rationalized revision on Export Duty structure for Raw Hides, Skins and Leather.

18. 30 Exemptions / Concessional Rates Notifications have been extended till 31.03.2029

19. 126 exemptions/ concessional rates are being continued upto 31.3.2026

20. 28 exemptions/ concessional rates are being lapsed on their end dates of 30.9.2024

21. End dates are being removed in 4 exemptions as they are covered by the exclusion clause.

22 .GST Compensation Cess is being exempted with effect from 1st July, 2017 on imports in SEZ by SEZ units or developers for authorized operations. This will have a retrospective effect.

23. The time period for submission the final Mega Power Project certificate is extended from 120 months to 156 months.

24. As per Notification No. 45/2017-Customs dated 30.6.2017 has been amended to increase the time-period of duty-free re-import of goods (other than those under export promotion schemes) exported under warranty from 3 years to 5 years.

25. The Limit under Notification No. 154/94 for Import of Samples for the purpose of being shown in India for guidance of exporters or securing export orders for goods other than gem and jewellery which was Rs. Rs. 1,00,000/- (One Lakh) has been increased to Rs. 3,00,000/- (Three Lakhs)

26. Section 54 of CGST Act and section 16 of IGST Act is being amended to prohibit refund of unutilized input tax credit or of integrated tax on zero-rated supply of goods which are subjected to export duty.

Notwithstanding anything contained in this section, no refund of unutilised input tax credit on account of zero rated supply of goods or of integrated tax paid on account of zero rated supply of goods shall be allowed where such zero rated supply of goods is subjected to export duty

27. An amendment in Sub Section (4) (ii) of Section 16 has been made which reads
…….or both, on zero rated supply of which, the supplier may pay integrated tax and claim
the refund of tax so paid, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.

Sub Section (5) of Section 16 to provide no refund for goods subjected to export duty is also added

Notwithstanding anything contained in subsections (3) and (4), no refund of unutilised input tax credit on account of zero rated supply of goods or of integrated tax paid on account of zero rated supply of goods shall be allowed where such zero rated supply of goods are subjected to export duty.

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One Week to go for IEC Update

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Reference is hereby made to FTP 2023 Para 2.05 (d) &  (e) which requires – An IEC Holder to enure that details of its IEC is updated electronically every years during April – June Period.  This update is required even if there are no changes.

In case the IEC details are not updated, IEC will get de-activated.

All IEC holders are thus requested to check their IEC and update the same immediately if not done.

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Exporters to apply NEW GST LUT for FY 2024-25

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As per the GST Rules and Procedure, Exporters exporting without payment of tax, needs to apply for Letter of Undertaking (LUT). The LUT is valid for every financial year.

Thus, as we come close to the financial year 2023-24 and the new FY 2024-25 will begin from 01st April 2024.

We wish to draw your attention that exporter must visit the GST portal and submit the new Letter of Undertaking (LUT) for the Financial Year 2024-25.

The Procedure is simple and will take not more than 5 mins online.

So to avoid any last minute hassles and challenges, request exporters, to visit the GST Portal today and submit and get their new LUT ARN No. for FY 2024-25.

Regards
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No IGST on Ocean Freight under RCM for Importers from 01.10.2023

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The Goods and Service Tax (GST) had provided 5% IGST on services of “Transport of goods in a vessel including services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India”

The GST Notificaiton No. 10/2017 – Integrated Tax (Rate) also made the tax payable on Reverse Charge Basis (RCM) vide sr. no. 10 of the notification in hands of Importer as defined under the Customs Act, 1962

Now, in response to various legal cases and Supreme Court judgement in the matter, the government has notified to omit the entry at sr. no. 10 from the above notification of RCM.

GST Notification No. 13/2023 – Integrated Tax (Rate) dated 26.09.2023 has been issued for the same. The notification would come into force from 01st October, 2023.

Thus, providing a relif to the importers from paying IGST on Reverse Charge Basis on the ocean freight component especially under CIF / CFR contracts.

It must be noted, However, Importer still has to pay IGST at the time of Import along with other Import duties at the time of filling Bill of Entry when goods are imported into India.

Importers may refer the notifications for further details.

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