Important points in the midterm review of Foreign Trade Policy 2015-2020
Union Commerce and Industry Minister Suresh Prabhu on Tuesday unveiled the Mid-Term Review of Foreign Trade Policy 2015-20 by announcing a slew of incentives to boost country's exports. The 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.
The salient features of the midterm review as under:
*Scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) enhanced.
*MEIS incentive raised for ready-made garments and made-ups by 2% (additional annual outgo Rs 2,743 crore).
*Across-the-board increase of 2 percent in existing MEIS for exports by MSMEs/ labor incentive industries (Rs 4,567 crore).
*Annual incentive increased by 34 percent to Rs 8,450 crore.
*SEIS incentives raised by 2 percent with a view to boosting services sector exports (Rs 1,140 crore).
*Validity of Duty Credit Scrips increased from 18 months to 24 months to enhance their utility in GST framework.
*To focus on improving ease of trading across borders for exporters and importers.
*Professional team to handhold, assist and support exporters in accessing markets, meeting regulatory norms.
*New Logistics Division to promote integrated development of the logistics sector.
*State-of-the-art trade analytics division in DGFT for data-based policy actions.
*New agricultural exports policy to focus on increasing exports of value-added agri products.
*New Services Division in DGFT to examine Exim policies and procedures to push services exports.
*Supplies of goods and services to SEZs to be treated as zero-rated under GST.
*Import of second-hand goods for repair/refurbishing/reconditioning/re-engineering made free.
*Increase focus on exploring new markets and products, raising share in traditional markets and products.
*Promotion of exports by MSMEs and labor intensive sectors to increase employment opportunities for youth.
*To enhance participation of Indian industry in global value chains. RSN NKD CS ARD
· The Ministry has increased rates of rewards for some products of MEIS by 2%. The major sectors that will be benefited by this raise will be the sectors of ready-made garments and made-ups, leather, agriculture, ceramic, sports goods, medical and scientific products, electronic and telecom components, and so on. These revised rates are applicable from 1st November 2017 until 30th June 2018
· The SEIS has incurred raised rates of rewards by 2%. The services of professional services, management consulting, entertainment, transportation and so on. The capitation fees of educational institutions are exempt from this reward. The Ministry has also notified the list of foreign exchange remittances that are not eligible for entitlement under SEIS. The applicability of this notification is from 1st November 2017 until 31st March
· The Ground Handling services are also classified as Foreign Exchange in addition to certain services that were classified as foreign exchange for SEIS even though the payments were made in INR.
· The valid period of Duty Credit Scrips is increased from 18 months to 24 months to augment their efficacy in the GST framework.
· GST rate for transfer or sale of scrips has been reduced to zero from the earlier rate of 12%.
· The minimum export performance clause has been revised 2 out of 4 years than the earlier requirement of 2 out of 3 years to facilitate the “Status ”
The Self-ratification scheme of AEO:
There is an allowance of duty-free-export production under duty exemption scheme with a self-declaration. The self- ratification for exporters to apply for advance authorization if the Standard Input Output Norms (SION) or valid ad-hoc norms are not notified. This facility also extends to exporters to holding Authorised Economic Operator status with Customs.An exporter who is either a manufacturer or merchant and holds Authorised Economic Operator (AEO) certificate under the Common Accreditation Programme of CBEC are also eligible to opt for this scheme.The scheme will accelerate export of new products by decreasing product turn-around time, mainly in sectors such as pharmaceuticals, chemicals, textiles, engineering and high technology which have dynamic raw material requirements.
Export Promotion Capital Goods (EPCG) Scheme:
· Specific capital goods cannot be imported according to Export Promotion Capital Goods scheme, and the negative list is yet to be notified.
· The specific restriction that has been imposed on second-hand capital goods is removed.
· The unit stock transfer of EPCG imported goods is allowed between the same company.
Export-oriented Unit (EOU) Scheme:
· The earlier limit of domestic traffic area sale up to 50% for the Free on Board(FOB) value of exports has been canceled with or units operating under theExport Oriented Unit (EOU) scheme.
· Except for the units that are involved in the process of packaging, labeling, segregation or granulation can supply its products or services without any ceiling. However, they should fulfill the requirement of positive net foreign exchange earnings (NFE).
· The procurement provisions of EOU has been matched with the GST provisions by Notification 48/2017-Central Tax about deemed exports.
· The procedure regarding the transfer of manufactured goods, capital goods and goods of EOU’s units will be subjected to compensation and cess.
Deemed Exports:
· The definition of “Deemed” has been modified to include the supplies coming under the GST purview under Section 147.
· The aids of the Deemed Exports will be available for supplies from 30th These provisions are also applicable to the said supplies made after the date above.
Modifications in the rules of import and export:
· Importers approved by the AEO programme (Tier-II and Tier-III) can avail the benefit under Deferred Payment of Import Duty Rules, 2016. This facility also has been introduced in FTP.
· The clearance of warehoused goods has been incorporated into the Customs Law.
· The importers good if found defective or as not per specifications, then the importer can re-export as per law.
· The Import-Export Code (IEC) has been aligned with PAN and will be separately issued by DGFT when applied.
· The exporters can self-certify their product’s place of origin according to the self-certification scheme.
DGFT PORTAL:
The Directorate General of Foreign Trade has introduced a portal for the import-export traders to register their grievances or any suggestions. They can also track down their application status via this portal by using their assigned reference number. This portal help to high-level tracking and monitoring the queries raised by the traders.Exporters or Importers can also voice their concerns or suggestions on DGFT portal at Contact@DGFT.
The changes in GST:
· There has been an introduction of E-wallet for enabling more liquidity to the traders.
· Merchant exporters can pay a nominal GST of 0.1% for procuring goods from domestic suppliers for export.
· A message exchange system has been introduced and will include message between Goods and Service Tax Network (GSTN) and the RBI.
· The issue of working capital blockage for the exporters due to upfront payments of GST has been relaxed. By the Advance Authorisation, Export Promotion of Capital Goods and 100% EOU scheme, exporters have been enabled to source inputs/capital goods from abroad and from domestic suppliers for exports without upfront payment of GST.
· The flat rates of GST have brought a considerable saving in the logistics and transaction cost and have facilitated ease of businesses.
· The Gold availability issue has been resolved as a Specific Nominated Agency has been appointed to import Gold without
· A new IT-based system is fielded by the Reserve Bank of India called the Export Data Processing and Monitoring System (EDPMS) for the supervising of export and simplifying Authorised Dealer Banks set up.
Other important points to note:
· Revised guidelines and procedure notified for approaching Policy Interpretation Committee and Policy Relaxation Committee
· As part of trade assistance, an expert team has been envisioned to support exporters on specific issues.
· A newly created Logistics Division is to be established to assist in removing obstructions and improving trade-related set-up through a partnership with stakeholders.
Revising export strategy:
· Enabling continued support for multilateral trade,
· Unrelenting efforts to integrate with significant
· Grow trade by focusing on new markets and their unexplored potential.
· Availing the leveraging benefits of GST
· Active monitoring of exports performance and taking speedy remedial measures through state-of-the-art data analytics
· Facilitating ease of trading across global borders through trade facilitation
· Enhancing participation of Indian industry in universal value chains
· Improving farmers’ incomes through an agri-centric policy for agrarian exports
· Promoting exports by MSMEs and labor-intensive sectors to increase occupation openings for the youth.
The mid-term review of FTP has not formed any new schemes, however, has realigned the policy with GST and has consequently provided relief to exporters through augmenting benefits under MEIS/ SEIS schemes. The emphasis of the introduced initiatives focuses on MSMEs, agro sector, and small exporters. Explicit procedural relaxation and trade simplification measures have been added to help exporters. Further, the assurance to use data analytics for continuous observing of trade performance and take on the real-time policy intervention is a proactive approach which will lead to the superior impact of global trade in the Indian export-import trade.The mid-term review is seen as a game changer and to provide the much –needed relief for exporters and will help in the advancement of trust based partnership.
Conclusion:
It is expected that the incentive proposed and adjustment in GST, will help the Indian exporters to compete in the world of business and increase their share substantially to contribute to the country’s trade. This is also expected to close the trade gap.
(Based on the Goverment notification and selected articles on internet)
