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Term review of Foreign Trade Policy announced; key highlights

Term review of Foreign Trade Policy announced; key highlights

At a time when the global economy is still recovering from a slowdown, the government on Tuesday announced fresh incentives worth Rs 8,450 crore to boost exports and support the MSME and labour-intensive industries.

The MEIS is the most popular incentive for exporters, under which identified sectors are given duty exemption scrips that are fixed at a certain percentage of the total value of their exports.

The government also announced other steps to make processes relating to trade simpler including a self certification scheme for duty free imports, a single point electronic contact to traders with the Directorate General of Foreign Trade for trade and consignment related queries, and creating a logistics division in the department of commerce. Assuring the exporters that the Government will sort out these issues together with exporters, Prabhu said, "No new legislation can be made flawless in one go".

This will benefit sectors like, leather, agriculture, carpets, handicrafts and marine products.

The existing trade policy, which came into effect on April 1, 2015, envisages increasing India's exports of goods and services to $900 billion by 2020.

In April 201, the government had announced several incentives in the five-year FTP for exporters and units in the special economic zones (EPZs) to almost double India's exports of goods and services to $900 billion by 2020.

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"The revised FTP focuses on the goal of exploring new markets and new markets and new products as well as on increasing India's share in traditional markets and products, leveraging benefits of Goods and Services Tax (GST) by exporters; close monitoring of export performances and taking immediate corrective measures based on data analysis", read the FTP statement, 2017.

On the administrative side, the GST Council has resolved the problem of blockage of working capital even as the refund of ITC and IGST refunds for exporters are being expedited. However, the commerce ministry delayed the review in a bid to comprehend the impact of the new tax regime on the business of the exporters. This is the first such decline in nearly 13 months when merchandise exports were surging.

Prabhu assuaged their fears by saying the government was working on clearing all refunds due till now and clarified that the refund amount was much smaller than reported in the media. Today, it is paid before goods are removed from the ports which causes a lot of bottleneck at the port as goods are held up there.

The FTP will provide "additional annual incentive of Rs 749 crore for the leather sector, Rs 921 crore for hand-made carpets of silk, handloom, coir, jute products, Rs 1,354 crore for agri products, Rs 759 crore for marine products, Rs 369 crore for telecom, electronic components, Rs 193 crore for medical equipment", the ministry said in a tweet. Exporters can import necessary inputs under duty-free scheme through self declaration instead of having to secure ratification from the Norms Committee that the raw materials will indeed be used in the manufacture of export items.

The issue of working capital blockage of exporters due to upfront payment of GST on inputs has been addressed by extending to them the benefit of sourcing inputs or capital goods from overseas as well as domestic suppliers without upfront GST payment. Emphasis will be given on "Ease of Trading" across borders.


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