Mid-Term Review of Foreign Trade Policy

Why in news?

The mid-term review of the five-year Foreign Trade Policy (FTP), which was rolled out in 2015, was released recently.

What are the highlights?

• Incentives - Incentives under the Merchandise Export from India Scheme (MEIS) have been raised.
• An increase from 2% to 4% for leather, textiles, agriculture products and carpets has been announced in this regard.
• Service Exports from India Scheme (SEIS) incentive is raised by 2% with a view to boosting services sector exports.
• Also, supplies of goods and services to SEZs to be treated as zero rated under GST.
• Import of second hand goods for repair/refurbishing/re- conditioning/re-engineering is made free.
• Scrips- Exporters are given duty exemption scrips under the FTP, pegged at a certain percentage of the total value of their exports.
• The scrips can be used to pay duties on inputs including customs levies and can also be traded in the market.
• Validity of Duty Credit Scrips has been increased from 18 to 24 months to enhance their utility in the GST framework.
• The GST for transfer and sale of these scrips has been abolished and brought to zero from 12%.
• The Centre has also allowed duty free imports for exports against self-certification.
• Support systems - A professional team will be set up to assist and support exporters in accessing markets, meeting regulatory norms, etc.
• A team of experts will also be set up to assist exporters on GST.
• A New Logistics Division to promote integrated development of the logistics sector will be put in place.
• The round-the-clock customs clearance facility has been extended to more number of sea ports and air cargo complexes.
• State-of-the-art trade analytics division in DGFT (Directorate General of Foreign Trade) will be set up for data-based policy actions.
• New Services Division is planned in DGFT to examine Exim policies and procedures to push services exports.
• Besides, new agricultural exports policy to focus on increasing exports of value-added agri products will be rolled out.
• Further, to address the capital blockage and liquidity problems of exporters, the government plans an e-wallet from April 1, 2018.

What are the possible benefits?

• Export is a strategic part of economic policy and thus logically a part of the foreign policy too.
• FTP review focuses on improving ease of trading across borders for exporters and importers.
• It also focusses on exploring new markets and products aimed at increasing India's share in the traditional markets and products.
• This is perhaps to enhance participation of Indian industry in global value chains.
• Promotion of exports by MSMEs and labour intensive sectors is expected to increase employment opportunities for the youth.
• The review is aimed at taking corrective steps by assessing the impact of export sops on various sectors.
• However, the package may not lead to immediate export growth but may contribute to stall the decline in growth of shipments.

Source: Economic Times, Business Standard