Why in news?
The mid-term review of the five-year Foreign Trade Policy (FTP), which was rolled out in 2015, was released recently.
What are the highlights?
- Incentives - Incentives under the Merchandise Export from India Scheme (MEIS) have been raised.
- An increase from 2% to 4% for leather, textiles, agriculture products and carpets has been announced in this regard.
- Service Exports from India Scheme (SEIS) incentive is raised by 2% with a view to boosting services sector exports.
- Also, supplies of goods and services to SEZs to be treated as zero rated under GST.
- Import of second hand goods for repair/refurbishing/re- conditioning/re-engineering is made free.
- Scrips- Exporters are given duty exemption scrips under the FTP, pegged at a certain percentage of the total value of their exports.
- The scrips can be used to pay duties on inputs including customs levies and can also be traded in the market.
- Validity of Duty Credit Scrips has been increased from 18 to 24 months to enhance their utility in the GST framework.
- The GST for transfer and sale of these scrips has been abolished and brought to zero from 12%.
- The Centre has also allowed duty free imports for exports against self-certification.
- Support systems - A professional team will be set up to assist and support exporters in accessing markets, meeting regulatory norms, etc.
- A team of experts will also be set up to assist exporters on GST.
- A New Logistics Division to promote integrated development of the logistics sector will be put in place.
- The round-the-clock customs clearance facility has been extended to more number of sea ports and air cargo complexes.
- State-of-the-art trade analytics division in DGFT (Directorate General of Foreign Trade) will be set up for data-based policy actions.
- New Services Division is planned in DGFT to examine Exim policies and procedures to push services exports.
- Besides, new agricultural exports policy to focus on increasing exports of value-added agri products will be rolled out.
- Further, to address the capital blockage and liquidity problems of exporters, the government plans an e-wallet from April 1, 2018.
What are the possible benefits?
- Export is a strategic part of economic policy and thus logically a part of the foreign policy too.
- FTP review focuses on improving ease of trading across borders for exporters and importers.
- It also focusses on exploring new markets and products aimed at increasing India's share in the traditional markets and products.
- This is perhaps to enhance participation of Indian industry in global value chains.
- Promotion of exports by MSMEs and labour intensive sectors is expected to increase employment opportunities for the youth.
- The review is aimed at taking corrective steps by assessing the impact of export sops on various sectors.
- However, the package may not lead to immediate export growth but may contribute to stall the decline in growth of shipments.
Source: Economic Times, Business Standard
