The government Tuesday announced additional incentives totalling Rs 8,450 crore to help boost exports in its mid-term review of the Foreign Trade Policy 2015-2020, which included simplified processes to help exporters and a commitment to roll out an e-wallet scheme to ease working capital issues for exporters in the post-GST regime. It raised the incentive rate by 2 per cent under the most popular Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS).
The additional incentives have been provided for exports by small and medium enterprises, labour-intensive and agriculture-based exports among others. These comprise additional annual incentive of Rs 749 crore for leather sector, Rs 921 crore for handmade carpets of silk, handloom, coir and jute products, Rs 1,354 crore for agriculture products, Rs 759 crore for marine products, Rs 369 crore for telecom and electronic components, and Rs 193 crore for medical equipment.
Commerce and Industry Minister Suresh Prabhu said the mid-term review of the five-year FTP aims to promote exports by simplification of processes, enhancing support to high employment sectors, leveraging benefits of GST, promoting services exports and monitoring exports performance through state-of-the-art analytics. He said the government has set up a “state-of-the-art” trade analytics division set up in DGFT for data based policy actions, which will improve policy making process and making it a dynamic and evidence driven. Prabhu said the government was also working on Ease of Trading rules to make processes simpler for exporters and importers.
Under the MEIS scheme available to exporters, identified sectors are given duty exemption scrips, which are fixed at a certain percentage of the total value of their exports. These scrips can be used to pay duties on inputs and can be traded. Validity of the scrips under the incentive schemes has been increased from 18 months to 24 months under the review. Among the services sector that will benefit from the extra incentives include educational, hospital, hotels and restaurants, business, legal, accounting and architectural.
The government also announced other steps to make processes relating to trade simpler including a self certification scheme for duty free imports, a single point electronic contact to traders with the Directorate General of Foreign Trade for trade and consignment related queries, and creating a logistics division in the department of commerce.
Speaking at the conference, Finance Secretary Hasmukh Adhia said Rs 8,500 crore is amount of “extra monetary benefits that will go to the exporters” as a result of the policy. He said the Goods and Services Tax will help make tax related processes simpler for the exporters.
“If you leave the transition problems aside, the GST will benefit exporters the most,” Adhia said. Central Board of Excise and Customs Member PK Das said the tax department has enabled processes and systems to further reduce blockage of working capital of exporters.
“The extension of validity of scrips from 18 months to 24 months along with the provision of zero GST on sale of scrips will help the industry in a big way. The other initiatives like the doing away with the testing of samples for drawback purpose and the introduction of e sealing facility for exporters will lead to quick clearances of the consignment. 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.
“The increase of 2% for MEIS and SEIS is good, but is up to June 2018 and is in respect of exports after Nov 17. The creation of a complaint resolution mechanism, relaxations in the EPCG (Export Promotion Capital Goods) scheme, increase in MEIS /SEIS benefits and scrip validity etc. would assist exporters — in addition the pending refunds need to be released expeditiously. The mid-term review has not focused much on the GST linkages with exports and imports, which would possibly happen as an ongoing process,” said MS Mani, Senior Director at Deloitte India.
As per the commerce ministry data, India’s exports during October 2017 were at $23.09 billion as compared to $23.36 billion during October 2016, a decline of 1.12 percent in dollar terms. In rupee terms, exports declined by 3.59 per cent in October 2017. During April-October 2017-18, exports grew at 9.62 per cent in dollar terms.