₹8,450cr sops, regulatory reforms to revive exports
THE FINE PRINT Midterm review of foreign trade policy aims to help exporters with a slew of fresh incentives
NEW DELHI: The government on Tuesday announced a series of steps to revive exports amid disruptions to supply chains arising from the implementation of the goods and services tax (GST).
Fresh export incentives to labour intensive sectors and services that will cost the exchequer ₹8,450 crore annually were announced as part of a mid-term review of foreign trade policy for 2015-2020.
Also announced were a series of steps to improve the ease of doing business for exporters by cutting red tape and automating more processes.
The Union government is pursuing a two-step strategy. In the short run it is offering sops to exporters, while in the long run it is looking to improve the competitiveness of Indian exports by raising productivity of exporters, especially in the supply chain through the implementation of GST and tackling the ease of doing business.
These measures are expected to benefit sectors including leather, readymade garments, handcrafted carpets, agriculture, telecom and hotels and restaurants.
The foreign trade policy announced in 2015 had proposed to double Indian exports of goods and services to $900 billion by 2019-20, a steep target given that exports have grown marginally in the last three years.
Exporters are facing a severe liquidity crunch because of delayed refunds in the new GST regime. The review of the foreign trade policy, initially scheduled to be released on July 1, was delayed to compensate for any impact of GST on exporters.
The revised policy proposes an additional two percentage point incentive for labour-intensive sectors such as leather, readymade garments, handicrafts and agricultural and marine products under the merchandise exports from India scheme. Similar incentives were also announced for services. The scheme provides incentives in the form of duty credit scrip to the exporter to compensate for any losses on payment of duties.
Commerce and industry minister Suresh Prabhu said the review aims to promote exports by simplifying processes, boosting support to high-employment sectors and leveraging benefits of GST and will help double farmers’ income. “We will constantly review the policy. We do not need to wait 2-3 years to make changes,” Prabhu said.
The mid-term review pro- poses to set up a single point of contact at the Directorate General of Foreign Trade for exporters and importers. It also proposes to set up a logistics arm in the commerce ministry and a trade analytics division for databased policy actions.
The policy also proposes to increase the validity period of duty-free credit scrips to 24 months from 18 months to enhance their utility in the GST framework and seeks to remove the levy of GST on these scrips. Further, goods which are freely importable can be re-exported.
Finance secretary Hasmukh Adhia assured exporters on Tuesday that the government is constantly taking steps to address troubles faced by exporters, including alleviating working capital shortages due to delayed refunds and problems in filing tax returns.
The government has already announced many steps to alleviate the liquidity challenges faced by exporters.