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The new five-year Foreign Trade Policy (FTP), scheduled on April 1, 2021, has been deferred by another six months, with the government extending the existing policy further till September 30, 2021.
As uncertainty on the effect of the resurgence of Covid-19 virus on exporters looms large, the delay will ensure continuity and give more time to the government to examine ways to deal with the crisis at hand and pave the way ahead, say experts.
“In view of the unprecedented situation arising out of Covid-19, which is persisting, the government has decided to continue benefits under various export promotion schemes by extending existing Foreign Trade Policy by another six months... which will provide continuity in the policy regime. Similar extension is made in the related procedures,” an official release stated.
Exemption from payment of IGST and compensation cess on imports made under Advance/EPCG Authorisations and by EOUs has also been extended up to September 30. Similarly, validity period of the Status Holder Certificates is also extended, the release said.
The five-year FTP was initially to be in place on April 1, 2020, but was delayed by one year due to the outbreak of Covid-19.
“There weren’t too many new things that the government was ready to announce at the moment apart from some provisions for e-commerce, one-district-one-product, special economic zones (SEZs) and trade facilitation. With more time, there would be a scope to incorporate more initiatives, including ones keeping in mind the effect of the second wave of the pandemic,” a source tracking the matter told BusinessLine .
The Commerce & Industry Ministry will continue to hold consultations with stakeholders to get more inputs for the long-term policy, the source added.
“With the extension of the existing Foreign Trade Policy 2015-20 up to September 30 2021 by DGFT, the Services Export Promotion Council is hopeful of the speedy notification of Services Export from India Scheme for 2019-20 which would be a great relief to the services exporters reeling under the Covid-19 impact,” the SEPC stated in a release.
The government discontinued the popular Merchandise Export from India Scheme (MEIS) for exporters from January 1, 2021, which was one of the schemes a WTO panel had ruled against following a complaint from the US. The SEIS, however, is not a targeted scheme at the WTO as it is restricted to services.
The new input duty reimbursement scheme for goods exporters — the Remission of Duties and Taxes on Export Products (RoDTEP) — announced with effect from January 1, 2021, continues to hold exporters in suspense as the rates of reimbursement for various sectors are yet to be announced.
“It is clear that the government cannot announce new export subsidies that go against the WTO rules. At the same time, given the uncertain global trade climate, there is clearly a requirement of some additional support for exporters. The new FTP may take care of this need ,” the source said.
India’s goods exports are expected to slide by 8-10 per cent in 2020-21 from last year’s $314 billion as global demand continues to be low and the resurge in Covid-19 cases in the key markets of the EU and the US make the situation grimmer.
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