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The Commerce Ministry has started work on the formulation of a new foreign trade policy (FTP) and has invited stakeholder suggestions for boosting exports and trade.
“It has been decided to revise the current foreign trade policy (2015-20). Therefore, suggestions/inputs are invited from all the stakeholders for framing the proposed new FTP,” the Directorate-General of Foreign Trade (DGFT) said in a notice.
The new policy will be important as the existing export subsidies, including the popular Merchandise Export from India scheme (MEIS), will be withdrawn as they are no longer compatible with the World Trade Organization (WTO) rules.
Export incentives will have to be replaced with incentives that are allowed under the multilateral regime such as rebate of all input taxes paid by exporters at the Central and State levels and subsidies for research & development and modernisation of production process.
Five-year policy
The new five-year foreign trade policy (2020-25), to be applicable from the next fiscal, is expected to be released in September.
The US has already challenged a slew of export subsidies given by India at the WTO on the ground that India is no longer eligible to extend these.
According to the US complaint, the targeted measures provide producers of steel products, pharmaceuticals, chemicals, information technology products, textiles and apparel with benefits to the tune of around $7 billion a year.
“If export subsidies are not replaced soon, more such complaints may be filed at the WTO against the country and the judgements delivered may not be favourable towards the country. Such a situation needs to be avoided,” a government official said.
India’s GNI
Under existing WTO rules, a country can no longer offer export subsidies if its per capita GNI (gross national income) has crossed $1,000 for three years in a row. In 2017, the WTO notified that India’s GNI had crossed $1,000 in 2013, 2014 and 2015.
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