Union Commerce and Industry Minister Suresh Prabhu on Tuesday unveiled Mid-Term Review of Foreign Trade Policy 2015-20 by announcing a slew of incentives to boost country's exports. Prabhu said that mid-term review of FTP will leverage the long term advantages of GST in terms of reduced compliance and logistics costs.
Mid-term review of Foreign Trade Policy will focus on finding new markets and new products as well as increasing India's share in the traditional markets and products, the minister said. To achieve Prime Minister Narendra Modi's vision of doubling farmers' incomes, FTP will have a focused policy for agricultural exports.
"Mid-term review aims to promote exports by simplification of processes, enhancing support to high employment sectors, leveraging benefits of GST, promoting services exports,monitoring exports performance through state-of-the-art analytics," Suresh Prabhu added.
The minister said the Merchandise Exports from India Scheme (MEIS) incentive rate will be raised by 2 per cent across the board for labour intensive/MSME sectors. Services exports from India Scheme (SEIS) incentives for sectors such as education, health, hospitality, business, legal, accounting, architectural, engineering to be increased by 2 per cent.
The increase in annual incentive by 34 per cent to Rs 8,450 crore will benefit leather, handicraft, carpets, sports goods, agriculture, marine, electronic components and project exports, the minister said in a tweet.
The FTP will provide "additional annual incentive of Rs 749 crore for the leather sector, Rs 921 crore for hand-made carpets of silk, handloom, coir, jute products, Rs 1,354 crore for agri products, Rs 759 crore for marine products, Rs 369 crore for telecom, electronic components, Rs 193 crore for medical equipment," the ministry said in a tweet.
It further said MEIS incentives for two sub-sectors of textiles - ready-made garments and made-ups - have already been increased to 4 per cent from 2 per cent, with an additional annual incentive of Rs 2,743 crore.
Validity period of Duty Free Credit Scrips has already been increased from 18 to 24 months to enhance their utility in the GST framework. GST rate on sale/transfer of scrips has been reduced to zero, the ministry said.
A new Logistics Division has also been created in Department of Commerce for integrated development of the logistics sector. The move is likely to positively impact exports by lowering transaction cost, increasing speed & ease of goods movement, improving Logistics Performance Index.
Prabhu said introduction of the new tax regime "would be the catalyst for spurring growth in the export sector. The lower duty on most of items and reduction of cascading effect of various duties would lower the cost and make exports competitive".
He added that green shoots in export growth are distinctly visible now with positive export growth in 13 of the past 14 months.
The five-year FTP was announced on April 1, 2015, and set an ambitious target of India's goods and services exports at $900 billion by 2020. It also has a goal of increasing India's share of world exports to 3.5 per cent, from 2 per cent.
FTP will continue to be reviewed and amended for addressing exporters concerns, simplification of procedures and for promotion of exports, Prabhu said
Finance Secretary Hasmukh Adhia further stated that ITC and IGST refunds for exporters are being expedited and incentives have been increased for labour intensive MSME sectors.
The government also said that support to Export Credit Guarantee Corporation will be enhanced to provide increased insurance cover to exporters particularly MSMEs exploring new or difficult markets
FTP will also focus on 'Ease of Trading' across borders. A professional team will handhold, assist and support exporters in their export related problems, accessing export markets, meeting regulatory requirements, the ministry added.