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Sitaraman promises an all-new foreign trade policy

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10 September 2014

The new Foreign Trade Policy-2014-19, to be announced by the government soon, will include strategy, goals, roadmaps and time frame for increasing exports. It would be comprehensive and composite, focusing on products which are winners and potential winners, targeted global engagements, branding and packaging measures etc.

"Very soon the FTP will be unveiled. I can give you a broad idea, but not the intrinsic details. Whatever was the structure of earlier FTPs, it would be different from that," commerce minister Nirmala Sitharaman said while addressing a press conference on completion of the 100 days of the NDA government.

The commerce ministry is scheduled to announce the new five-year Foreign Trade Policy (2014-19), which seeks to boost manufacturing and exports, among other things.

The new FTP would aim at a reduction in transaction costs through initiatives for simplification of documents and procedures through realignment, redrafting and synchronisation of policy so as to bring in more clarity.

The ministry also proposes to rationalise the number in schemes and ensure that provisions are placed in an orderly manner. The number of columns in application forms for various schemes is being reduced to the minimum, she said.

In order to simplify the various procedures, the commerce ministry proposes to hold inter-ministerial consultations online where exporters can file their applications on the DGFT website.  This will reduce the transaction cost and transaction time and also bring transparency in the system.

DGFT has proposed to do away with authorisations in physical form and would issue authorisations under duty exemption, EPCG schemes and scrips in an electronic form. This would make paperless transaction a reality, she said, adding that her ministry is working with CBEC to take this initiative forward.

The new FTP will have specific measures to facilitate the entry of new entrepreneurs and manufacturers in global trade by providing them the required training, Sitaraman said.

Capacity building
As part of the capacity building of new entrepreneurs DGFT has recently launched a `You Tube' channel which explains the export-import procedures. Some of the activities have been completed while others are in the works. The `You Tube' will explain the following:

  • How to obtain an Import Export Code number (completed)
  • How to view/print e-Bank Realisation Certificate (completed)
  • Online training programme for new entrepreneurs (proposed)
  • How to apply for Certificate of Origin - Non-preferential/preferential
  • How to file Shipping Bill for exports
  • How to apply for Registration-Cum-Membership Certificate
  • How to file Bill of Entry for imports
  • How to pay fee/duty by e-challan
  • How to file application for authorisation under Chapter 3,4 and 5 of FTP

The commerce ministry, she said, is working to improve the electronic data interface (EDI) connectivity in the ports customs and other related centres.

In 2013-14, clearance of 65.2 per cent of the total value of exports has been through EDI, while non-EDI process accounted for 34.4 per cent and manual clearance accounted for 0.42 per cent of exports compared to 58.2 per cent through EDI, 30.09 per cent through Non-EDI and 11.7 per cent through manual in 2009-10.

During the year, EDI facilitated 72.41 per cent of the total imports (in value terms) while non-EDI accounted for 27.3 per cent and manual procedures accounted for 0.26 per cent of imports compared to 65.8 per cent through EDI, 12.5 per cent through Non-EDI and 21.8 per cent through manual procedures in 2009-10.

In order to re-energise manufacturing-led exports, Sitaraman said, the government has undertaken an extensive review of Special Economic Zones and prescribed reforms in the governance process by prescribing time limits for disposal of various activities related to SEZ developers/units, digitising and standardising procedures and harmonising rules, formats and fees etc.

Proposals regarding modification of minimum alternate tax and the dividend distribution tax (MAT and DDT) and the dual use of infrastructure in non-processing areas are under active consideration of the ministry, she said, adding that other issues such as those relating to service tax, extending tax holiday for the pharmaceutical industry and extension of customs e-commerce portal to the SEZ framework, are being actively pursued.

Role for states 
The centre has sought active participation of state governments in developing an export strategy, which has been welcomed by them.

State governments have been advised to appoint export commissioners for coordination of all export-related activities. The commerce ministry has written to all state chief ministers suggesting that they oversee the task of mainstreaming their states in the export strategy formulation.

Sitaraman said an insurance-based scheme is being evolved for stabilisation of prices of four plantation crops, including tea, coffee, rubber and spices.

Beside, the centre is in the process of formulating a national policy for rubber sector.

The government also envisages resetting of goals for various commodity board while also initiating branding an packaging promotion of select commodities like saffron, tea and other plantation commodities.

The minister also listed processes already initiated by the commerce department, which include enhancing export of items from the defence sector; enhancing automatic route for FDI from 26 per cent to 49 per cent; bringing clarity on industrial licences for the defence sector; fast racking of applications; listing of munitions and creation of HS codes for items in this sector etc.

Henceforth, she said, a more focused direction would be given to the utilisation of FTAs and to establish new approaches to preferential trading with Latin America, CIS region and Africa.

She said the growth momentum and export competitiveness has picked up with the government instilling greater confidence among businesses. The improved outlook and pro-active policy environment will help boost exports and bring India on the trajectory of greater economic growth.

During year 2013-14, total value of the country's exports stood at $465.90 billion with merchandise and services exports accounting for $314.40 billion and $151.5 billion, respectively.

The government has set a total export target of $500 billion for the current fiscal (2014-15), with merchandise and services exports expected at $340 billion and $160 billion, respectively.

As per the current rankings, India is the 19th largest exporter (with a share of 1.7 per cent) and 12th largest importer (with a share of 2.5 per cent) of merchandise trade in the world. In commercial services, India is the 6th largest exporter (with a share of 3.3 per cent) and 7th largest importer (with a share of 2.9 per cent).

India's share in world trade (merchandise and services) has increased from 1.77 per cent in 2008 to 2.27 per cent in 2013. The government, she said, aims to raise this to 3.5 per cent by 2018-19.

The service sector has been a major force in driving growth in the Indian economy for more than a decade, she said, adding that services contribute around 60 per cent to the GDP of the country, 35 per cent to employment, 25 per cent to total trade, around 40 per cent to exports, 20 per cent to imports and account for more than 50 per cent of FDI into the country.

Net trade balance in service sector exports of the country for May and June stood at $5.89 billion and $5.78 billion, respectively.

Sitaraman said focused action and reforms are needed in the business areas of tourism, health care, logistic services, R&D, consulting, printing and publishing, telecom, construction, education, entertainment to increase exports.

Focus on project exports, specially to Africa, West Asia, CIS countries, Asean countries of Cambodia, Laos, Myanmar and Vietnam and a mandatory standards regime to be  implemented, to protect consumers and raise the quality of merchandise produced will help raise the capacity to export to discerning markets..

On the WTO dispute, Sitaraman said, India wants the imbalance in the implementation of the Bali package rectified in order to prevent the subversion of the development agenda. India has reiterated its position that it is committed to all the Bali decisions, including trade facilitation.

However, for a balanced Bali outcome, WTO must deliver on the other Bali decisions, including the decision on public stockholding for food security purposes in a time bound manner, she said.

Ensuring a permanent solution on public stockholding for food security will help correct a longstanding injustice in WTO rules.

India also offered suggestions on the procedure to be followed in order to ensure time bound delivery of an outcome on public stockholding for food security. India also made a case for adopting a similar approach on all the elements of the Bali package, including the LDC issues, she said.





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