The government had announced the Merchandise Export India Scheme (MEIS) in 2015 when the current FTP was rolled out, merging five different schemes and greatly increasing the budget allocation to it.
With most key programs already announced, the next five-year Foreign Trade Policy (FTP) is unlikely to roll out a full-scale program involving substantial tax incentives for exporters this time around, sources told FE. . The government’s plan to replace the current law on special economic zones with a new one, in order to make these duty-free enclaves more attractive to investors, could also be announced separately. The new FTP should come into force from April 1, unless the validity of the existing one – already extended by two years as a result of the pandemic – is extended again.
It will be a break with the past. The government had announced the Merchandise Export India Scheme (MEIS) in 2015 when the current FTP was rolled out, merging five different schemes and greatly increasing the budget allocation to it. It had allocated up to Rs 39,097 crore to exporters under the MEIS for the pre-pandemic year (FY20). This scheme was replaced by the Duties and Taxes on Exported Products Remission Program (RoDTEP) from January 2021.
Nevertheless, the Ministry of Commerce could revamp the Service Exports from India Scheme (SEIS) to cover more businesses, especially MSMEs, or announce a new scheme in the FTP to replace it. In addition, it will focus on easing the compliance burden on exporters, revising various registration and licensing requirements, and putting in place a “New Era Facilitation Framework” to help push through exports to $1 trillion by FY28 from $400 billion this fiscal year, one of the sources mentioned.
Already, the government has earmarked Rs 21,340 crore for duty free programs for exporters like RoDTEP and RoSCTL in the FY23 budget. from that intended for service exporters. As such, Trade and Industry Minister Piyush Goyal has repeatedly urged exporters to avoid the crutches of subsidies and boost their competitiveness, which would be key to achieving sustainable export growth.
Since the FTP is designed in the wake of the Covid-19 outbreak, it would focus on ensuring India’s greater integration with the global supply chain and reducing its costs. high logistics. Moreover, the Atmanirbhar Bharat initiative will find proper expression in politics, the sources say. Already, the Commerce Department has set a target to cut India’s high logistics costs – long blamed for eroding exporters’ competitiveness – by up to five percentage points over the next five years from 13. -14% current gross domestic product (GDP).
The new policy will come at a time when exports are looking to benefit from an industrial recovery in advanced economies. High international commodity prices and the acceleration of domestic manufacturing due to production-related incentive programs are also expected to improve export prospects. Yet, for the lofty $1 trillion goal to be met, the government will need to address the usual structural problems, including high logistics costs, repay levies on inputs consumed in exports on time, and quickly firm up free trade agreements. trade with key markets, exporters mentioned. The FTP, along with other initiatives by the Department of Trade and Industry, will pave the way for a “great leap in exports”, another source said.
Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest Biz news and updates.