FTP review: Exporters hail Rs 8450 crore incentive top-up

Marco Green
December 6, 2017

The government announced export incentives of around Rs 8,500 crore for labour-intensive sectors and services on Tuesday as it sought to blunt the impact of the goods and services tax (GST) and push shipments from the country amid signs of a pickup in global demand.

The much-awaited mid-term review of the government's Foreign Trade Policy (2015-20), released on Tuesday, has pressed nearly all the right buttons in order to shore up India's anaemic export growth.

In an attempt to address concerns over both jobs and exports, the modified policy has raised incentives for a host of exporters.

Exports entered the negative terrain after over a year, contracting 1.12 per cent in October, primarily due to the liquidity problem faced by exporters following the GST launch.

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.

"There has been across the board increase of 2 percent in existing MEIS incentive for exports by MSMEs/labour-intensive industries involving additional incentive of Rs 4,567 crore", the policy statement said.

Impetus worth Rs 1,140 crore has been given to the services trade, as well as annual incentives worth Rs 2,743 crore for sub-sectors under the textiles sector.

The government has repositioned India's export strategy by increasing incentives in the Merchandise Exporters from India Scheme (MEIS).

The five-year FTP was announced on April 1, 2015, and set an ambitious target of India's goods and services exports touching United States dollars 900 billion by 2020.

"GST was appreciated by all for being the game-changing tax reform. The lower duty on most of items and reduction of cascading effect of various duties would lower the cost and make exports competitive". This is the first such decline in nearly 13 months when merchandise exports were surging. "I am very happy to say that the finance ministry also responds to it very quickly".

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. The scheme provides incentives in the form of duty credit scrip to the exporter to compensate for any losses on payment of duties. "This will not only help in easing the port congestion but will also aid in quick movement of the cargo", Apparel Export Promotion Council (AEPC) chairman Ashok Rajani said. Information based policy interventions will be ensured through a state-of-the-art trade analytics division, commerce and industry minister Suresh Prabhu said while unveiling the revised Foreign Trade Policy.

A new Logistics Division has been created in the Department of Commerce to develop and coordinate integrated development of the logistics sector. Now it has extended the same sop to exports from other labour and MSME dominated sectors including gems and jewellery, leather and leather products, carpets and agriculture.

Other reports by Click Lancashire

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