New trade policy’s focus is on systemic changes: Sitharaman

Exporters had to wait for six-seven months for the five-year Foreign Trade Policy, but the final blueprint had the “confident support’’ of the Finance Ministry, said Commerce Ministry Nirmala Sitharaman.

Addressing the media after announcing the policy on Wednesday, the Minister and Commerce Secretary Rajeev Kher spelled out the finer details. Edited excerpts:

You have talked about a mid-term review of the policy. Why the shift?

Sitharaman: We are going to have a review after two and a half years because we want to have a consistency in policy.

This policy is for five years. We do not want periodic changes or unpredictable changes affecting the overall tenor of the policy. We have now committed to having a mid-course evaluation.

You have set a combined export target of $900 billion for goods and services for 2020. What is the break-up?

Kher: We have deliberately not distributed the returns expected from merchandise and services sectors for the five-year target because we are hoping that with the changes in the services architecture and incentives, services should do better. Therefore, we don’t want to constrain it by putting a target. So, let the merchandise and services compete with each other.

Have the beneficiaries of the replaced schemes been covered under the two new incentive schemes?

Kher: Since the whole exercise was scientifically done, products which may not require the incentives and were given have been ignored. Only those that have qualified have been identified.

Sitharaman: To add to that, the larger guiding principle has been that, to meet the requirement of the World Trade Organisation, all of us agree that changes will take place. The route of facilitation through subsidies and interest subvention alone cannot be a sustainable route for improving trade systems. The focus is to look at systemic changes.

What about the popular interest subvention scheme for exporters?

Kher: The interest subvention scheme has been approved for a period of three years in the Budget for 2015-16 with a provision of ₹1,625 crore. Now we have to decide about sectors and get approvals. Selection will have to be timed with the policies. Interest subvention is operating at 3 per cent.

Can SEZs expect more sops?

Sitharaman: Although the request of Minimum Alternate Tax and Dividend Distribution Tax are still with the Finance Ministry, we have extended them the benefits of the new and very comprehensive export incentive schemes. I believe this will revive special economic zones to a large extent.