FTP review: Exporters hail Rs 8,450 crore incentive top-up

The government on Tuesday announced Rs 8,450 crore incentives for exporters in sectors like leather and agriculture, as it looks to boost outward shipments, which have been disrupted by implementation of goods and services tax (GST).

New Delhi: Exporters on Tuesday welcomed Rs 8,450 crore increase in incentives announced as part of the Foreign Trade Policy review but demanded more measures to improve market access and cost competitiveness.

"Exporters are pleased to find that the cutting cost and time of transactions form key priorities of the government with steps like better trade facilitation, including easing of customs procedures, but we would urge the finance ministry to ensure that the tax refunds are done at the earliest so that the tempo in export growth is maintained," Engineering Export Promotion Council of India Chairman T S Bhasin said.

"The mid-term review of the FTP 2015-20 has made provisions which will boost trade facilitation and ease of doing business... However, the exporters were hoping for measures which improve market access and cost competitiveness," apparel exporters' body AEPC Chairman Ashok Rajani said.

The government today announced Rs 8,450 crore incentives for exporters in sectors like leather and agriculture, as it looks to boost outward shipments, which have been disrupted by implementation of goods and services tax (GST).

Unveiling the incentives in the 'Mid-Term Review of the Foreign Trade Policy (2015-20)', Commerce and Industry Minister Suresh Prabhu said incentives have been increased by two per cent for merchandise as well as services exports in the labour-intensive and MSME sectors.

The revised FTP provides for across the board increase of 2 percent in existing Merchandise Exports from India Scheme (MEIS) for exports by MSMEs/labour intensive industries, involving additional outgo of Rs 4,567 crore.

This will benefit sectors like, leather, agriculture, carpets, handicrafts and marine products.

Further, to provide impetus to services trade, the policy has raised the Service Exports from India Scheme by 2 percent, envisaging an additional outgo of Rs 1,140 crore.

Exporters' body FIEO suggested that government should gradually extend the MEIS to other sectors of exports since they are also facing numerous challenges in exports.

"A one-time relaxation to meet export obligation may be provided to industry so that it can escape penal provisions which will be disruptive and provide an opportunity to add to exports besides providing employment," it said.

"Mid-term review of the Foreign Trade Policy 2015-20 contains several positive features. Ficci is happy to see across-the-board rise of 2 percent in MEIS incentive for exports by MSMEs and labour intensive sectors. This step was much-needed," Ficci Secretary General Dr Sanjaya Baru said.

The five-year FTP was announced on April 1, 2015, and set an ambitious target of India's goods and services exports at USD 900 billion by 2020. It also has a goal of increasing India's share of world exports to 3.5 percent, from 2 percent.

"Foreign trade policy review, as expected, did not have any big bang announcements but increase in MEIS/ SEIS by 2 percent, increased financial support to employment generating sectors, simplification and relaxation of import processes & licenses are step in right direction.

"While exporters will be happy with the direction, they would look forward to some quick and long term solution to working capital blockage with respect to input GST," Pratik Jain, Leader- Indirect Tax, PwC India, said.

"Increasing the validity period of duty credit scrips from 18 months to 24 months besides increase in the export incentives (both for MEIS and SEIS schemes) should benefit the export sector in general," Deloitte India Senior Director R Muralidharan said.