NEW DELHI: Exporters of steel, wooden items and machinery products have raised concern over China increasing the refund on value-added tax (VAT) on these products without raising the actual tax. Beijing has increased the export tax rebate on around 400 “electromechanical and cultural” products, including steel bars, nuts, bolts, safety pins, rivets, photo frames and wooden products to “improve the export tax rebate policy” in the last few months. 

India competes with China on certain items and domestic exporters will feel the pinch, people in the know of the development said. “This is a cash support which China is using to protect itself from any tariff increase by the US,” said an official. 

Beijing has increased the export tax rebate rate for multi-component integrated circuits, non-electromagnetic interference filters, books, newspapers and other products to 16% from the earlier rate of 13% or 15%. On bamboo carvings and wood fans, the benefit has been raised to 13% from zero earlier. The export tax rebate rate on safety pins has been raised to 9% compared with 5% earlier. 

Ajay Sahai, CEO of Federation of Indian Export Organisations expects Indian exports of these products to be worth $30 billion across Asia, Africa and Latin America, which could get affected in the next few months.