Policy

Foreign Trade Policy review to spell more measures to push exports

Amiti Sen New Delhi | Updated on January 09, 2018

Suresh Prabhu, Commerce Minister

Job-creating sectors set to get more sops under export scheme

Employment generating sectors such as leather and marine products will get higher sops in the much-awaited review of the Foreign Trade Policy (FTP), likely to be announced next week.

“Most of the labour intensive sectors including leather, sports goods, marine products and textiles are likely to get a 2 per cent additional incentive under the Merchandise Export from India Scheme (MEIS),” a government official told BusinessLine.

The Commerce & Industry Ministry recently enhanced the rate of incentives under the MEIS for garments and made-ups to 4 per cent, from 2 per cent, till June 2018 to help exporters struggling with the implementation burden of the new Goods & Services Tax (GST) regime. “Most of the incentives for goods under the on-going five-year FTP are extended through the MEIS scheme. So in the review of the FTP, the additional sops will be given through the scheme,” the official said.

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 scrips can be used to pay duties on inputs, including customs duties.

The review of the FTP (2015-2020) was due earlier this year but was delayed due to the implementation of the GST in July and the problems faced by exporters under the new tax regime.

“After a series of meetings of the GST Council, a large number of implementation issues that the exporters were facing have been sorted out. The rest of the problems have also been identified and would be redressed over the next few months,” the official said.

Falling exports

With exports falling 1.1 per cent in the month of October 2017 to $23 billion the government does not want to wait any more to announce sops for at least the labour-intensive sectors.

“The announcement of the review of the FTP, likely on December ,5 will not be the last package of incentives for exporters. We would come up with more announcements as and when required,” the official said.

Commerce & Industry Minister Suresh Prabhu has asked the NITI Aayog to give inputs on an interim package to boost exports, which is expected soon.

External developments

The initial target set by the FTP of increasing exports to $900 billion by 2020 is already out of the picture as external developments, including unfavourable movement of commodity prices and fluctuating foreign exchange, have hit performance, Commerce Secretary Rita Teaotia had earlier explained.

With exports lower than $300 billion in the last two years, a target of $500 billion would need substantial efforts from the government.

Published on November 30, 2017

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