The mid-term review of the Foreign Trade Policy (FTP) 2015-20 will be announced ahead of schedule to ensure its parallel roll-out with the Goods and Services Tax (GST) regime in July, Commerce & Industry Minister Nirmala Sitharaman has said.
“A valid suggestion has come that this mid-term review (of the FTP) should be concluded and rolled out simultaneously with the GST so that the FTP and the GST are on parallel tracks,” Sitharaman said at a press conference on Saturday following a stakeholders' meeting.
I want the Commerce Secretary and the Directorate-General of Foreign Trade (DGFT) to sweat it out so that the reviewed FTP policy comes out well in time with the GST roll-out, she added. The review was earlier expected to be in September.
Acknowledging that exporters had a number of concerns with the GST regime to be implemented from July 1, the Minister said her Ministry would facilitate a meeting between them and Revenue Secretary Hasmukh Adhia where they could seek clarifications.
For two specific concerns facing exporters — one related to the process of refund of taxes and the other related to input credits for tax-exempted inputs — will be taken up by a panel of senior officials comprising former Commerce Secretary G. K. Pillai, Commerce Secretary Rita Teaotia and DGFT Ajay Bhalla directly with the GST Council.
“The last meeting of the GST Council before the roll-out is likely to be around May 18-19. The group will seek time from the GST Council and talk about these two issues so that the concerns of exporters are taken care of,” she said.
The first of the two concerns to be discussed with the GST Council related to the principal approach that exporters will need to pay input taxes first before they get refunds. “Exporters, especially those in the small and medium sector, are apprehensive that it will lead to the locking up of their capital and would affect their business,” the Minister said.
The second concern is related to treatment of tax exempted goods if used as inputs for export items. “It could mean that exporters won’t get input credits for such tax exempted items. This would go against their interest. We want the GST Council to look at the problem and address it,” she added.
The FTP review will focus on propelling SMEs, which generate jobs, and also look at the possibility of enhancing the scope of rupee trade by getting into currency swap mechanism with South-East Asian countries, Sitharaman said.
India will also start giving grants for global company partnerships to encourage joint ventures between African and CLMV (Cambodia, Laos, Myanmar, Vietnam) countries.
The five-year FTP had set an ambitious target of $900 billion exports by 2020, but it seems hard to achieve given the slowdown in global trade and the country’s exporters over the last three years. Sitharaman, however, said stakeholders were not talking in terms of reviewing the target but looking at various ways to achieve it.