I welcome the government’s decision to extend the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme till December 31, particularly at a time when Indian exporters are facing geopolitical uncertainties. But one question comes to my mind: why has the scheme been extended for only three months?

RoDTEP matters to MSME exporters because it refunds certain taxes, duties and levies incurred in the manufacturing and distribution of goods that are not refunded through other mechanisms. RoDTEP rates vary from 0.3 to 3.9 per cent, depending on the product and subject to applicable caps. If not reimbursed, these costs can make Indian goods more expensive and less competitive in overseas markets.

For Indian MSMEs, which usually operate on shoestring budgets and face working-capital constraints in keeping their businesses running, even a small increase in cost matters. Many of them operate on thin margins and compete with global suppliers for the same orders. At a time when freight costs, crude oil prices and disruptions in global trade are already putting pressure on businesses, the continuation of RoDTEP has indeed provided some relief to exporters.

But exporting is not a three-month business.

An exporter may negotiate an order today, quote a price to an overseas buyer, procure raw materials and finally ship the goods several months later. So, if an MSME does not know whether RoDTEP will continue beyond December, how can it confidently price its products or plan its future orders?

This is where I think the problem lies. Exporters need support, but they also need certainty about how long that support will continue.

India has set ambitious export targets and wants more MSMEs to explore global markets. But for this to happen, businesses need to know well in advance what policies and incentives will be available to them. Extending an important scheme for three months certainly offers some immediate relief, but does it really help an exporter plan for the next six months or a year?

The RoDTEP extension is certainly a welcome step. But I hope the government looks beyond such short-term extensions and gives exporters greater certainty about the future of the scheme.