New FTP to focus on e-commerce, GIs, district hubs, SEZs and R&D

Amiti Sen New Delhi | Updated on August 11, 2021

New incentives to the industry will not be in the form of direct export sops as these are disallowed by WTO, say officials

The new five-year Foreign Trade Policy, scheduled to be in place from October this year, is likely to focus on promoting e-commerce, geographical indication (GI) products, district export hubs initiative, special economic zones, and research & development, an official tracking the development said.

The new incentives given to the industry will not be in the form of direct export sops as these are disallowed by the World Trade Organisation. “The Centre has done away with some export schemes, like the Merchandise Export from India Scheme that are facing problems at the WTO. The new initiatives will all be WTO-compatible,” the official told BusinessLine.

However, some existing schemes like the Export Promotion Capital Goods (EPCG) scheme, which allows exporters to import certain capital goods used in manufacturing without paying duties subject to specified export obligation, could continue despite being challenged at the WTO.

“Exporters need continuity. Already the MEIS has been junked and is being replaced by a new scheme which is causing adjustment pains. That is why an important scheme like EPCG may be allowed to continue for some time to help exporters deal with the changing situation and ensure that export targets are met,” the official added.

Export target

Commerce Minister Piyush Goyal earlier talked about reaching an export target of $1 trillion in five years which could be the official goal for the five-year FTP. With exports on a high growth track in the on-going fiscal, the Commerce Ministry has set an ambitious target of $400 billion for 2021-22.

“The Commerce Ministry is in consultations with the industry and various export bodies on ways to develop export capability. E-commerce, GIs, district export hub and R&D are some of the areas where the government wants to focus,” the official said.

The district export hubs initiative will form an important component of the new FTP under which around 700 districts will be identified to become export hubs with a focus on select products. “The Centre and States will together address bottlenecks for exporting these products, help local producers scale-up manufacturing, and find potential buyers outside India,” the official said.

Mapping of products that have gained GI tag — a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin — and using e-commerce to market them effectively within the country and globally is also likely to feature in the FTP.

“The FTP will push e-commerce in a big way to help producers of niche items and GI products located in various corners of the country to be able to market their items to the world. There is likely to be a separate chapter for this,” the official said. The DGFT is looking at various recommendations such as reducing compliance burden on MSMEs, among others, according to the official.

Published on August 11, 2021

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