New 5-year Foreign Trade Policy may get delayed by six months

Amiti Sen | | Updated on: Mar 15, 2022
The policy, which is scheduled on April 1, but could be extended till September 30, is unlikely to have new incentive scheme for exporters

The policy, which is scheduled on April 1, but could be extended till September 30, is unlikely to have new incentive scheme for exporters | Photo Credit: UGURHAN

No new export incentive expected; focus on ease of doing business, promoting e-commerce, GI products, district hubs

The government’s preoccupation with the fall outs of the Russia-Ukraine war and the lingering disruptions caused by the Covid-19 may delay the new five-year foreign trade policy (FTP) by another six months as inter-ministerial consultations are not over yet, a source has said.

The policy, which is scheduled on April 1, but could be extended till September 30, is unlikely to have new incentive scheme for exporters, the source added.

However, the policy will have several elements of improving ease of doing business, including increase in IT interface and easing of procedures, promoting e-commerce and geographic indication (GI) products, popularisng district export hubs and incentivising research and development, the source added.

“The Centre has in place well thought out incentive schemes for exporters that are compatible with WTO norms and cannot be challenged. There is no need to make any changes. So, there won’t be much in the area of new incentive schemes in the FTP,” the source said.

Since January 1 2021, the government has replaced the Merchandise Export from India Scheme (MEIS) with the Remission of Duties and Taxes on Exported Products (RoDTEP). The WTO had identified the MEIS as a non-compatible scheme with WTO rules as the incentive provided to exporters under the scheme was not directly linked to input taxes.

The RoDTEP scheme, on the other hand, has been drafted keeping in mind the details of input taxes paid by exporters so that the duty remission that takes place under the scheme can be correlated to the taxes paid.

e-commerce promotion

Promotion of e-commerce will be big on the Directorate General of Foreign Trade’s (DGFT) agenda as the small and medium units have not been able to take advantage of the online platform yet, the source said.

The FTP would also work on mapping GI products and promote use of e-commerce to market them effectively within the country.

“There is likely to be a separate chapter on e-commerce in the new FTP for the first time,”the souce said.

Ease of doing business

To improve ease of doing business, the DGFT is looking at ways to reduce compliance burden, especially on the MSME sector. Use of IT to facilitate export and import will also be improved through some additional measures, the source added.

The district export hubs initiative may also feature in the new FTP under which around 700 districts are likely to be identified to become export hubs with a focus on select products. Both the Centre and States are expected to work together on this initiative.

Commerce & Industry Minister Piyush Goyal has been emphasising on a $1 trillion export target for the next five years, but this ambitious target may get revised upwards given the fact that in 2021-22, the country is set to cross the export target of $400 billion.

“We are hopeful that the inter-ministerial consultations, that have got delayed, will be completed soon and the new FTP can be announced, if not on April 1, then on October 1,”the source said.

The new five-year FTP was initially scheduled on April 1 2020 but had to be postponed due to uncertainties created by the Covid-19 pandemic and the government’s need to react to it on a real-time basis.

Published on March 15, 2022
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