The government acted quickly, but more
Like most governments, our government also did not anticipate the crisis. Nevertheless, once the scale of the disruption became clear, it worked on several fronts to contain the damage. The Commerce Ministry restored the 50% reduction in eligibility under the Remission of Duties and Taxes on Export Products (RoDTEP) scheme and extended the full eligibility for another six months. The export obligation period under the duty exemption and export promotion capital goods schemes was extended till the end of August 2026. Time bound support to exporters was extended to the “Resilience and Logistics Interventions for Export Facilitation” (Relief) Scheme. Import of 40 materials required as inputs by downstream industries has been allowed duty free. Units in Special Economic Zones have been allowed to sell goods at lower customs duties in the domestic tariff area. Additional customs duty on aviation turbine fuel has also been reduced.
The government has also taken other steps. Excise duty on petrol and diesel has been cut to reduce the impact of high global crude oil prices on Indian consumers and businesses. Export levy has been imposed on diesel and aviation turbine fuel to maintain domestic availability. Domestic LPG production from refineries has been increased and supply of LPG and PNG to essential sectors has been prioritized, so that domestic and institutional demand can be met without any disruption. Agencies involved in transportation, including ports and shipping lines, have been asked not to increase charges unnecessarily. Facility has been provided for clearance of goods re-imported due to war related disruption. A multidisciplinary help desk has been set up for exporters facing logistics and shipping difficulties. Inter-ministerial meetings are held regularly to address the trade impacts of maritime transport disruption, particularly rising freight costs, shipping delays, shortage or unavailability of containers and port congestion.
Overall, responses include tax relief, domestic fuel supply security, export controls, shipping risk management, trade facilitation, and inter-ministerial coordination. The government deserves praise for its prompt response to the unprecedented crisis. Still, more can and should be done.
A temporary “business interruption package” with automatic triggers will help. It could provide for timely partial reimbursement of abnormal freight and war-risk insurance spikes beyond a limit, interest waiver on import credit for selected commodities, waiver of punitive interest due to shipment delays due to conflict, and easy restructuring of trade credit for standard accounts otherwise affected by war. Better monitoring and prompt clearance of consignments held up due to documentary mismatches arising out of re-routing, split consignments, transshipment charges and delayed vessel calls is also required. Hence there is speedy disbursement of GST refunds, duty drawback and duty credit, and close monitoring of opportunistic levies like war surcharge, bunker adjustment factor, re-routing surcharge, excessive demurrage and higher billing for crisis-hit routes.
A timely, calibrated and temporary support package at this stage will protect export competitiveness, stabilize essential imports and prevent avoidable stress in a trade ecosystem that is already under considerable stress.
Email: tncrajagopalan@gmail.com
