Amnesty scheme, incentives for repayment in new foreign trade policy

The new foreign trade policy also proposes to reduce export licence fee for MSMEs along with allowing merchanting trade, involving shipment of goods from one foreign country to another without touching Indian ports but involving an Indian intermediary.

Under the amnesty scheme, an online portal will be launched for registration and a six-month window till September 30 will be available to exporters to avail the scheme. It will cover all pending cases of default in export obligation of authorisations – these can be regularised on payment of all customs duties exempted in proportion to unfulfilled export obligation.

The maximum interest is capped at 100 percent of such duties exempted, and no interest is payable on the portion of additional customs duty and special additional customs duty. Cases under investigation for fraud and diversion are not eligible under this scheme.

In the foreign trade policy, which will come into effect from April 1, the government reiterated its $2 trillion target for exports of goods and services by 2030 with a shift from incentives to remission and entitlement-based regime.

The policy was unveiled after the previous policy expired three years ago, and was extended several times till March 31, 2023, amid the Covid-19 pandemic and turmoil in global geopolitics.

The previous foreign trade policy for 2015-2020 had targeted exports of $900 billion by 2020; this target was extended along with the policy for three years till March 2023. India is, however, likely to end 2022-23 with total exports of $760-770 billion as against $676 billion in 2021-22.

The new foreign trade policy has not put any end-date to the trade policy targets, with officials saying the policy will be dynamically updated based on feedback from stakeholders. Director General of Foreign Trade (DGFT) Santosh Sarangi said the policy will be updated “as and when needed”.

Commerce and Industry Minister Piyush Goyal said the export target of $2 trillion by 2030 will be met, urging for focus on merchandise exports so that they are not outpaced by services exports. He also said that industry cannot succeed only on the basis of subsidy or crutches and a consultative approach will continue to be adopted for issues of trade and industry with greater participation of districts and states.

Stating that the government is focusing on strengthening the rupee payment system, Commerce Secretary Sunil Barthwal said India is ready to trade in rupee with countries which are facing currency failure or have dollar shortage. The FTP benefits extended for rupee realisations through special Vostro accounts. “If there are countries where there are currency failures or they are having dollar or international currency shortages, we are willing to trade in rupee with them which will not only take the exports forward but also disaster proof those countries. We are playing the same role which the multilateral agencies used to play earlier,” he said.

Schemes of duty exemption such as advance authorisation, Duty Free Import Authorization (DFIA) will continue. Four new towns of export excellence — Faridabad for apparel, Moradabad for handicrafts, Mirzapur for handmade carpets and Varanasi for handloom and handicraft — have been declared.

There is also a push towards inclusion of green energy in the foreign trade policy. Battery Electric Vehicles (BEV) of all types, vertical farming equipment, wastewater treatment and recycling, rainwater harvesting system and rainwater filters, and green hydrogen have been added to green technology products and will be now eligible for reduced export obligation requirement under the Export Promotion Capital Goods (EPCG) scheme.

Policy for export of dual use items under Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) has been consolidated at one place in the trade policy. There will be focus on simplifying policies to facilitate export of dual use high-end goods/technology such as UAV/ drones, cryogenic tanks, certain chemicals etc. The qualifying thresholds for star ratings of exporters have also been lowered to enable more exporters with higher status.

Also Read

India changed since 2014, will emerge key driver of Asian, global growth:...

Services sector fires GDP growth to 6.1% in Q4

Manufacturing PMI hits 31-month high in May, riding demand surge

India's coal production grows 7.10% to 76.26 MT in May

Abhishek Jain, Tax Partner, KPMG said, “Continuation of schemes such as Advance Authorisation, EPCG with procedural ease will continue to promote exports from India and foster ease of doing business. Requisite thrust has been provided to emerging sectors including battery vehicles, e-commerce and merchanting trade. Another big item has been the launch of the Amnesty Scheme which should be leveraged by various exporters. Lastly, for sectors/ industries having unresolved expectations/ issues, timely representations should be filed so as to ensure updations in policy.”