The mid-term review of the Foreign Trade Policy (FTP) announced today focuses on leveraging the long term advantages of the goods and services tax (GST), in terms of reduced compliance and logistics costs.
The FTP will focus on exports from labour intensive and MSME sectors by way of increased incentives in order to increase employment opportunities. Emphasis will be given on 'Ease of Trading' across borders. Information based policy interventions will be ensured through a state-of-the-art trade analytics division, commerce and industry minister Suresh Prabhu said while unveiling the revised Foreign Trade Policy.
While the share in traditional products and markets will be maintained, Prabhu said the focus will be on new products and new markets. At the same tile, the commerce minister focused on transparency and trust with the industry and maintenance of quality standards to succeed in the international market.
The revised FTP will help in making Indian exports more competitive, especially since the government has made schemes for boosting manufacturing and exports. The issue of working capital blockage due to GST has also been resolved, minister of state for commerce and industry Chaudhary said even as he stressed on the need to diversify the export basket. The Export of agricultural products will be encouraged for increasing farmers' incomes.
On the administrative side, the GST Council has resolved the problem of blockage of working capital even as the refund of ITC and IGST refunds for exporters are being expedited.
Revenue secretary Hasmukh Adhia said the procedure for processing refunds to exporters has started and that the government has about 10,000 applications to process and the procedure will be expedited.
The commerce ministry plans to follow a 'Whole of government' approach involving all ministries and state governments to boost exports.
Recognising the role of medium and small scale industries in exports, and the need to handhold these sectors, the rates for MEIS for such sectors have been enhanced. An important consideration in framing the FTP has been the need to ensure that the FTP is aligned with both India's interests in trade negotiations, as well as its obligations and commitments under various WTO agreements, the commerce minister stated
According to latest data released by the government, trade deficit in October widened sharply to $14 billion from $9 billion in September this year and $11.13 billion in October 2016, because of weaker exports and simultaneous increase in oil and gold imports.
A sharp fall in export of items such as readymade garments, gems and jewellery and leather products has resulted in a 1.2 percent year on year decline in exports of merchandise in October to $23.09 billion. This is the first such decline in almost 13 months when merchandise exports were surging. In October, imports increased 7.6 percent to $37.11 billion. This decline in exports and continued increase in imports lead to the widening of the trade deficit.
Highlights of the revised FTP:
- New incentives worth Rs8,000 crore with focus on micro and small enterprises, labour intensive sectors;
- Self-certification scheme for duty-free imports;
- A 2 per cent increase each in incentive rates of the Merchandise Exports from India Scheme and Services Export from India Scheme;
- A new trade data analytics division under the Directorate General of Foreign Trade will analyse real time data to help fine tune policy.