Commerce Ministry To Soon Come Out With New Foreign Trade Policy
The commerce ministry will soon come out with a new foreign trade policy, which provides guideline and incentives for increasing exports, for the next five financial years 2020-25, an official said.
The ministry is giving final touches to the new policy as the validity for the old one will end on March 31, 2020.
"We have taken views of all stakeholders. The new policy is likely to be announced by September-end or early-October," the official said.
The new policy would focus on simplifying procedures for exporters and importers besides providing incentives to boost outbound shipments.
The ministry's arm directorate general of foreign trade is formulating the policy.
At present, tax benefits are provided under merchandise export from India scheme for goods and services export from India scheme.
In the new policy, changes are expected in the incentives given to goods as the current export promotion schemes are challenged by the U.S. in the dispute resolution mechanism of the World Trade Organization.
In this backdrop, the government is recasting the incentives to make them compliant with global trade rules, being formulated by Geneva-based WTO, a 164 member Geneva-based multilateral body.
The commerce ministry has also floated a cabinet note for a new export incentives scheme— Rebate of State and Central Taxes and Levies —that would be compliant with the WTO norms.
The RoSCTL scheme is available for exports of garments and made-ups. It would now be proposed to extend it to all exports in a phased manner.
The new scheme would replace the existing MEIS, which was challenged by the U.S. last year in the WTO. It would ensure refund of all un-rebated central and state levies and taxes imposed on inputs that are consumed in exports of all sectors.
Major un-rebated levies are - state VAT/central excise duty on fuel used in transportation, captive power, farm sector; mandi tax; duty of electricity; stamp duty on export documents, purchases from unregistered dealers; embedded CGST and compensation cess coal used in the production of electricity.
Exporters are demanding incentives based on research and development, and product-specific clusters under the new policy.
Ludhiana-based Hand Tools Association President SC Ralhan said the new policy should have provisions for refund of indirect taxes like on oil and power, and state levies such as mandi tax.
"Sectors like engineering should be promoted as they create huge number of jobs. There should be relaxation for obtaining licence under Export Promotion Capital Goods for modernisation of industry," Ralhan said.
Assistant Professor and expert on agriculture economics Chirala Shankar Rao has said the policy should look at ways to promote agri exports as it holds huge opportunities.
During April-July 2019-20, the country's exports dipped 0.37 percent to $107.41 billion.
Since 2011-12, India's exports have been hovering at around $300 billion. During 2018-19, overseas shipments grew 9 per cent to $331 billion.
The government is targeting to increase the exports to $1 trillion in the coming years.