Waiting for a new foreign trade policy, will exporters' expectations be met?

- Amidst the current climate of uncertainty, exporters expect the new FTP to take steps to improve India's position in global trade and exports of services.

- The current foreign trade policy expires on September 30, before which a new FTP is likely to be announced.

Industry and exporters are eagerly awaiting the announcement of the new Foreign Trade Policy 2021-2. The government has formulated a new foreign trade policy for the year 2021-22 which will be able to streamline and accelerate exports, which were disrupted by the Corona epidemic. The foreign trade policies (FTPs) formulated by the government in the past included various schemes including some export incentives and export promotion schemes.

One thing is for sure, the next FTP will have similar plans. In view of the Corona epidemic, the government extended the Foreign Trade Policy 2018-20 by six months to September 30, 2021, which will expire. The FTP outlines government strategies and measures to increase domestic production and exports with the objective of accelerating economic growth.

With FTP 2021-2, one of its most anticipated and anticipated aspects is the maintenance of some of the schemes involved in FTP 2013-20 (which may be continued, phased or abruptly discontinued / implemented), as many new schemes as possible.

The central government has already given adequate and clear indications that the Merchandise Exports from India Scheme (MEIS) will not find a place in the new foreign trade policy.

The export industry is awaiting the implementation of the RoDTEP scheme so that its uncertainty is removed forever. Compared to MEIS, RoDTEP covers many more products. Also, the benefit under RoDTEP scheme is not currently extended to export oriented units and SEZ units. Another major concern regarding the RoDTEP scheme is that the rates proposed under this scheme are significantly lower than the rates of MEIS. However, there are many products that have reduced their MEIS rate by up to 30%, for example, where the MEIS rate was 5%, the RoDTEP rate is fixed at 0.5%.

Due to the unavailability of RoDTEP rates (and cancellation of MEIS), a large number of exporters have not been able to accurately estimate the cost of their export products and most of them have maintained the costs adopted under the MEIS rule. In fact, many exporters expect a rate comparable to the MEIS rate and spend accordingly.

However, the central government will not take any hasty action without examining its implications in the light of the WTO ruling on MEIS, especially when there are reports from various quarters that RoDTEP may also be challenged.

Amidst the current climate of uncertainty, exporters are expected to include in the new FTP measures to improve India's position in global trade and exports of services and to address the shortcomings of the old Foreign Trade Policy 2016-2020.

Exporters expect new foreign trade policy: -

Easy availability of credit: - Exporters especially MSMEs have been demanding easy credit access for a long time. Banks are reluctant to lend to many MSMEs due to lack of collateral. The new FTA is expected to pave the way for easy access to financing, such as - finance technology startups. The advisory committee has suggested raising the borrowing limit in Export-Import Bank of India.

Infrastructure Upgrade: - One of the reasons China is a powerhouse of production and exports - is its network of ports, highways and high-speed trains which is one of the best in the world. India needs to learn from its neighbor and improve its infrastructure by upgrading existing ports, warehouses, quality testing and certification centers and building new ones. Trade Infrastructure for Export Sector - which is planned to develop infrastructure for export promotion, was launched in 2013 for three years. The industry hopes to extend its term.

Less subsidy, more help: - In the year 2020, the Commerce Minister said that quality, technology and production standards are the answer to India's global ambitions, not subsidies. Many agree that government assistance in the form of skills development programs and technological upgradation, rather than subsidies, will help them become more competitive. Pharmaceuticals, biotechnology and medical devices are some of the areas that can do upskilling. Similarly, trade policy may include incentives to focus on research and development. As such, the Amended Technology Upgradation Fund Scheme launched for the textile sector on the technology front can be extended to other industries.

Tax relief: - If India is to remove subsidies, exporters will still need some form of government assistance. Simple and low taxes are one way to bridge this gap. There has been a long-standing demand for reduction in corporate tax rates and simplification of duty structures. The CII has suggested simplifying the structure of import duty. There is also a demand for improvement in existing schemes like EPCG and Duty Drawback Scheme. Other issues include digitization, awareness on the export front and wishlists.