The revised Foreign Trade Policy came into effect on 05/12/2017. The revised policy focuses on certain aspects such as-
(i) Exploring new markets and increasing India’s share in the traditional markets
(ii) Leveraging benefits of GST
(iii) Monitoring exports performance and taking corrective action through state of the art data analytics
(iv) Increasing ease of trading across borders
(v) Facilitating participation of Indian industries in international chains
(vi) Increasing farmers’ incomes through a focused policy for agricultural exports
(vii) Promoting exports by Micro, Small and Medium enterprises (MSMEs) and labor intensive sectors to increase employment opportunities for the youth.
To facilitate exports by MSMEs, MEIS incentives are made available at 2, 3, 4 and 5% of the FOB value of exports. The MEIS is an export promotion scheme which seeks to promote the export of notified goods manufactured in India. MEIS incentives on ready made garments and made ups have been marked up at 4% which total up to Rs. 2743 Crore of additional annual incentives. An overall increase of 2% in existing MEIS incentives for exports by MSMEs/ labour intensive industries has amounted to an additional Rs. 4567 Crore worth of additional annual incentives.
A trust based self ratification scheme has also been introduced wherein exporters (initially only the Authorized Economic Operators) will only need to self certify the requirement of duty free raw materials and get it authorized by the DGFT which will in turn expedite the export of new products especially in sectors such as chemicals, pharmaceuticals, textiles etc.
A new complaint resolution mechanism has also been introduced by the activation of the “Contact@DGFT” window which will allow exporters and importers to voice their concerns and help them resolve their foreign trade related issues.
For the purpose of easing trade across borders, a professional team has been envisaged which will assist exporters with export related problems, smoothen access to export markets etc. The team shall examine procedures related to clearances involved in cross-border trade and strive to simplify them. Measures will also be taken to lessen the time consumed at ports and airports.
For facilitation of Trade, the FTP highlights the setting up of the National Trade Facilitation Committee under the Cabinet Secretary which, along with the Steering Committee will primarily perform a supervisory and monitoring role. The Steering Committee has also set up 4 working groups which will focus on (i) infrastructure, (ii) legal issues, (iii) outreach and (iv) time release study. The facility of deferred payment of customs duty has also been introduced and the benefits of this will be available to tier two and three importers. An MoU has also bee signed with the Goods and Services Network which will strengthen processing of export transactions of taxpayers under GST, hence reducing human interface and increasing transparency. A major development that has been brought about has been the introduction of customs clearance facility 24×7 at 19 sea ports and 17 air cargo complexes.
The state-of-the-art analytics initiative envisages processing trade information from different data bases related to India’s key export markets and identifies specific actions to address export interests in various products and markets.
The policy has focused on increasing India’s exports in under explored markets in high potential regions such as Africa to cover not just trade in goods but also in capacity building, technical assistance and services such as education. The other target regions recognized are Latin America and the Caribbean regions. As for the new export products, this policy has acknowledged the products which are high in demand and which form 70% of the total 30% world exports, so as to capitalize on this advantage by propagating the export of such products further on.
One of the most important aspects of this policy has been its focus on agricultural exports for increasing farmers’ income. The policy entails various ways to achieve this such as by establishing a stable and open export policy for the long term, by ensuring sanitary standards are abided by, by promoting organic exports etc.
Certain export promotion schemes have also been introduced such as the Trade Infrastructure for Export Scheme which enhances export competitiveness, the Market Access Initiatives Scheme which will act as a catalyst to promote exports on a focus product- focus country approach. Additionally, supplies of goods and services to SEZs will be treated as zero rated under GST to get tax benefits.
The revised policy has also discussed the very important GST related reforms with regards to foreign trade such as-
(i) Its incorporation of zero rating of exports.
(ii) The option of obtaining refund of GST paid or getting exemption from paying GST on the export of finished products
(iii) The introduction of GST also means the disintegration of VAT which varied across all states and the uniform tax rate means saving up on logistical and transactional costs for exporters
(iv) Merchant exporters are allowed to pay a frugal 0.1% GST for obtaining goods from domestic suppliers for export purposes.
(v) GST rate for transfer/sale of scrips has been reduced to zero from an earlier rate of 12%.
Ministry of Commerce & Industry
