The much-awaited review of the Foreign Trade Policy (FTP) will be announced shortly today by Commerce & Industry Minister Suresh Prabhu extending support to exporters, especially those from leather-intensive sectors, to help deal with implementation burden of the new Goods & Services Tax (GST) regime.
Exporters are looking forward to additional incentives under the Merchandise Export from India Scheme (MEIS), longer time-frame for meeting export obligations under various schemes and self-certification of documents wherever required.
"Most of the labour intensive sectors including leather, sports goods, marine products and textiles are likely to get a 2 per cent additional incentive under the Merchandise Export from India Scheme (MEIS),” a government official told
Merchandise Export from India Scheme
The Commerce & Industry Ministry recently enhanced the rates of incentives under the Merchandise Export from India Scheme (MEIS) for garments and made-ups to 4 per cent from 2 per cent till June 2018 to help exporters struggling under the implementation burden of the new Goods & Services Tax (GST) regime.
“Most of the incentives for goods under the on-going five-year FTP are extended through the MEIS scheme. So in the review of the FTP, the additional sops will be given through this particular scheme,” the official said.
The MEIS is the most popular incentive for exporters, under which identified sectors are given duty exemption scrips that are fixed at a certain percentage of the total value of their exports. The scrips can be used to pay duties on inputs including customs duties.
GST implementation
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.
“After a series of meetings of the GST Council, a large number of implementation issues that the exporters were facing have been sorted out. The rest of the problems have also been identified and would be redressed over the next few months,” the official said.
With exports falling 1.1 per cent in the month of October 2017 to $ 23 billion the government does not want to wait any more to announce sops for at least the labour-intensive sectors.
“The announcement of the review of the FTP will not be the last package of incentives for exporters. We would come up with more announcements as and when required,” the official said.
Interim package
Commerce & Industry Minister Suresh Prabhu has asked the Niti Aayog to give inputs on an interim package to boost exports, which is expected soon.
The initial target set by the FTP of increasing exports of goods and services to $900 billion by 2020 is already out of the picture as external developments including unfavourable movement of commodity prices and fluctuating foreign exchange have hit performance, Commerce Secretary Rita Teaotia had earlier explained.
With exports of goods lower than $300 billion in the last two years, a target of $500 billion, too, would need substantial efforts from the government.