April 22, 2018

Boost for exports as Government announces more incentives

06 December 2017, 08:44 | Taylor George

Mid-term review of Foreign Trade Policy announced; key highlights

Centre unveils mid-term review of foreign trade policy to boost exports

While exporters will be happy with the direction, they would look forward to some quick and long term solution to working capital blockage with respect to input GST.

However the exporters demanded more measures to improve market access and cost competitiveness.

- Incentives for goods exports is Rs. 4,567 crore, and for services exports is Rs. 1,140 crore.

"The mid-term review of the FTP 2015-20 has made provisions which will boost trade facilitation and ease of doing business".

Referring to implementation of the Goods and Services Tax (GST), Prabhu said introduction of the new tax regime would be the catalyst for spurring growth in the export sector.

The government has repositioned India's export strategy by increasing incentives in the Merchandise Exporters from India Scheme (MEIS).

He, however, added that the 2% increase in the MEIS rates granted in the FTP mid-term review to labour intensive sectors would provide the much-needed respite to these sectors as they were facing intense competition from other countries.

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The commerce ministry has also brought a new trust-based self ratification scheme to allow duty-free import of inputs for exports.

The revised FTP focuses on exploring new markets and products, as well as increasing the country's share in traditional markets, leveraging the benefits of GST, increasing ease of trading across borders and increasing farmers' income through a focused policy for agricultural exports. "It will greatly help in expediting export of a number of important products such as engineering, pharmaceuticals, chemicals, textiles and high-tech products", said FICCI secretary general Sanjaya Baru in a statement.

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

The FTP will provide additional annual incentive of Rs 749 crore for the leather sector, Rs 921 crore for hand-made carpets of silk, handloom, coir, jute products, Rs 1,354 crore for agri products, Rs 759 crore for marine products, Rs 369 crore for telecom, electronic components, Rs 193 crore for medical equipment, the ministry said in a tweet.

Further, to give a fillip to services trade, the policy has raised the Service Exports from India Scheme (MEIS) by 2 per cent, envisaging an additional outgo of Rs 1,140 crore.

The issue of working capital blockage of exporters due to upfront payment of GST on inputs has been addressed by extending to them the benefit of sourcing inputs or capital goods from overseas as well as domestic suppliers without upfront GST payment.

Under the MEIS scheme available to exporters, identified sectors are given duty exemption scrips, which are fixed at a certain percentage of the total value of their exports.

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