|Foreign Trade Policy 2015-20
Foreign Trade Policy 2015 - 2020
The government has unveiled a five-year plan for lifting India's exports in a policy that seeks to make the country a bigger player in global trade by doubling overseas sales to $900 billion by 2019-20 while giving a boost to the Make in India initiative.
New FTP Eyes Doubling Oversees Sales to $900 Billion by 2019-20:
The simplified Foreign Trade Policy (FTP) for 2015-20 combines five earlier schemes for promotion of merchandise goods into one single programme and revamps one for promotion of services It focuses on reducing transaction costs for exports besides extending incentives to special economic zones (SEZs) and e-commerce. "The focus of the foreign trade policy is to support services and exports along with improving the ease of doing business. The new trade policy will boost exports and create jobs while supporting Make in India and Digital India," said commerce and industry minister Nirmala Sitharaman while announcing the FTP.
- Five existing schemes to promote goods exports merged into a single Merchandise exports from India Scheme (MEIS)
- Incentives in from of duty scrips as a % of realized FOB value of exports
- Service Exports from India Scheme (SEISI) will replace the Served from India Scheme (SEIS)
- Benefit available to only service providers located in India
- Incentive will be based on net foreign exchange earned
- SEZ Units - Entitled to benefits of MEIS and SEIS
- Duty Scrips - will be freely transferable and can be used for payment of custom duty, excise duty even service tax.
- Boost to make in India: Reduced export obligation for capital goods purchased from Indian suppliers under the EPCG scheme
- Higher level of rewards under MEIS export with high domestic content and value addition
- Trade facilitation and ease of doing business: online filing of documents / applications and paperless trade in 24X7 environment
- Online inter - ministerial consultations
- Simplification of procedures / processes, digitization and e-governance
- Measures to facilitate & encourage export of defence goods
- New initiatives for EOUs, EHTPs and STPs: they can share infrastructure & inter – Unit transfer of goods allowed.
The release of Foreign Trade Policy was also accompanied by a FTP Statement explaining the vision, goals and objectives underpinning India's Foreign Trade Policy, laying down a road map for India's global trade engagement in the coming years. The FTP Statement describes the market and product strategy and measures required for trade promotion, infrastructure development and overall enhancement of the trade eco system. It seeks to enable India to respond to the challenges of the external environment, keeping in step with a rapidly evolving international trading architecture and make trade a major contributor to the country's economic growth and development. The Minister promised to have regular interactions with all stakeholders, including State Governments to achieve the national objectives.
FTP2015-20 introduces two new schemes, namely "Merchandise Exports from India Scheme (MEIS)" for export of specified goods to specified markets and "Services Exports from India Scheme (SEIS)" for increasing exports of notified services, in place of a plethora of schemes earlier such as Focus Product and Focus Market Schemes with different conditions for eligibility and usage. There would be no conditionality attached to any scrips issued under these schemes. Duty credit scrips issued under MEIS and SEIS and the goods imported against these scrips are fully transferable. For grant of rewards under MEIS, the countries have been categorized into 3 Groups, whereas the rates of rewards under MEIS range from 2% to 5%. Under SEIS the selected Services would be rewarded at the rates of 3% and 5%.
Measures have been adopted to nudge procurement of capital goods from indigenous manufacturers under the EPCG scheme by reducing specific export obligation to 75% of the normal export obligation. This will promote the domestic capital goods manufacturing industry. Such flexibilities will help exporters to develop their productive capacities for both local and global consumption. Measures have been taken to give a boost to exports of defense and hi-tech items. These measures would not only capitalize on India's strength in these areas and increase exports but also provide employment.
Commerce Minister stated that although exports from SEZs had seen phenomenal growth, significantly higher than the overall export growth of the country, in recent times they had been facing several challenges. In order to give a boost to exports from SEZs, government has now decided to extend benefits of both the reward schemes (MEIS and SEIS) to units located in SEZs. The Minister expressed the hope that this measure will give a new impetus to development and growth of SEZs in the country.
Trade facilitation and enhancing the ease of doing business are the other major focus areas in this new FTP. One of the major objective of new FTP is to move towards paperless working in 24x7 environment. Recently, the government has reduced the number of mandatory documents required for exports and imports to three, which is comparable with international benchmarks. Now, a facility has been created to upload documents in exporter/importer profile and the exporters will not be required to submit documents repeatedly. Attention has also been paid to simplify various 'Aayat Niryat' Forms, bringing in clarity in different provisions, removing ambiguities and enhancing electronic governance.
Manufacturers, who are also status holders, will now be enabled to self certify their manufactured goods in phases, as originating from India with a view to qualifying for preferential treatment under various forms of bilateral and regional trade agreements. This "Approved Exporter System" will help these manufacturer exporters considerably in getting fast access to international markets.
A number of steps have been taken for encouraging manufacturing and exports under 100% EOU/EHTP/STPI/BTP Schemes. The steps include a fast track clearance facility for these units, permitting them to share infrastructure facilities, allowing inter unit transfer of goods and services, permitting them to set up warehouses near the port of export and to use duty free equipment for training purposes.
Considering the strategic significance of small and medium scale enterprises in the manufacturing sector and in employment generation, 108, 'MSME clusters' have been identified for focused interventions to boost exports. Accordingly, 'Niryat Bandhu Scheme' has been galvanized and repositioned to achieve the objectives of 'Skill India'. Outreach activities will be organized in a structured way at these clusters with the help of EPCs and other willing "Industry Partners" and "Knowledge Partners".
Interest Subvention : Interest subvention for exporters will be decided in 1-2 months by the Union Cabinet.
The Commerce Minister concluded her FTP address by saying "There is a clear recognition within the government that exports should not merely be a function of the marketable surplus but should reflect a genuine enhancement of economic capacity and development".
The Industry has welcomed the policy that has been delayed by a year. "The new policy recognises the global challenges faced by the export sector and also identifies the potential sectors which could emerge as winners in the next five years," said SC Ralhan, president of the Federation of Indian Export Organisations (FIEO). He described the policy as "pathbreaking". The Confederation of Indian Industry says that, "The much-awaited Foreign Trade Policy 2015-20 seems to be visionary which is in sync with government's campaigns like Make in India, Digital India and Skills India. This indicates that India is geared up to realize the aim of improving the ease of doing business".
The new policy framework has also been welcomed editorially by the Press. Newspapers have commented that the introduction of two schemes (Merchandise Exports from India Scheme and Service Exports from India Scheme) to replace many other existing schemes will go a long way in making export promotion policy simpler and easier to navigate. The introduction of a simplified import duty exemption certificate for all exports under the two schemes is expected to further streamline the foreign trade policy regime, making incentives more transparent and non-discretionary.
Business Standard has commented "But, in the end, India needs to evolve beyond tax breaks for manufacturers. The only way to ensure that India becomes an export powerhouse is to slot it into global supply chains. This does not require tax breaks; it requires freer trade and a realistic exchange rate policy - and, of course, better infrastructure.
ELCINA hopes that the Electronics & Hardware Industry will benefit from the new policy regime.