Policy

Foreign trade policy extended by a year to help exporters tide over Covid-19 crisis

Our Bureau New Delhi | Updated on March 31, 2020 Published on March 31, 2020

Validity of all export incentive schemes, too, extended

The Centre has decided to extend the existing foreign trade policy (FTP) by a year to March 31, 2021, to ensure continuity of existing schemes for exporters and importers as they struggle to cope with business disruption due to the Covid-19 crisis.

“The existing FTP 2015-20, which is valid up to March 31, 2020, is extended up to March 31 2021. Various other changes are also made — extending the date of exemption by one year and extending validity of DFIA and EPCG authorisations for import purposes,” said a notification issued by the Directorate General of Foreign Trade (DGFT) on Tuesday.

This means that all existing incentive schemes, including the popular Merchandise Exports from India Scheme (MEIS) and the Export Promotion Capital Goods (EPCG) scheme, will get an extension of one year and not lapse.

“Initially, the government was looking at a six-month extension of the FTP. But after due discussions, it was decided that since the Covid-19 situation was still unfolding and it would also take time for the economy to be back in shape once the crisis is over, the extension should be for one year,” a government official told BusinessLine.

Exporters had been demanding for the extension of the FTP as they argued that they had no appetite for new schemes and policies with their production halted, consignments stuck at ports and payments delayed.

In a video conference held by Commerce and Industry Minister Piyush Goyal to get inputs on the current situation, export organisations also made a case for extension of all applicable deadlines and validities.

One big relief for exporters is the continuation of MEIS, which earns them cashable scrips against exports of identified items, and the EPCG scheme, under which capital goods for production of export goods can be imported duty-free.

WTO dispute

Although the World Trade Organization has ruled that both the schemes should be replaced as such sops are against multilateral rules, the Centre is now likely to take all the required time in doing so. MEIS will be gradually phased out and replaced with the new Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, as per a Cabinet discussion, but rates will be fixed after due consultations with stakeholders.

India’s goods exports declined 1.5 per cent to $ 292.91 billion in April-February 2020 compared with year. Exports increased marginally in February 2020, but are expected to dip sharply this month because of the breakdown in production, supply and payments.

Published on March 31, 2020

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