MSMEs assured support, DGFT releases Mid-Term review of Foreign Trade Policy

Commerce and Industry Minister Suresh Prabhu

He also offered solace that issues related to the implementation of the Goods and Services Tax (GST) would ease soon.

Commerce and Industry Minister Suresh Prabhu announced more incentives to boost exports and create more jobs in the mid-term review of the Foreign Trade Policy 2015-20 on Tuesday.

The focus of the FTP, he said, will be on exploring new markets and products as well as increasing India's share in traditional markets and products.

The commerce ministry had unveiled FTP 2015-20 in April 2015, with an aim to nearly double India's exports of goods and services to United States dollars 900 billion by 2020.

He also stated the Government could have considered the industry's demand of GST free domestic procurement against EPCG and Advance Authorization Scheme to boost exports under mid-term review. However, the commerce ministry delayed the review in a bid to comprehend the impact of the new tax regime on the business of the exporters.

"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".

Faced with stagnating export growth, India has made a decision to offer more incentives to exports from labour-intensive and micro, small and medium enterprises (MSMEs) dominated sectors even as it launched initiatives like the use of trade analytics to identify new markets for its products. "While these measures are useful, we have to recognise that effective exchange rate management would be critical to achieve a significant increase in exports from India", the FICCI Secretary General added. These measures are expected to benefit sectors including leather, readymade garments, handcrafted carpets, agriculture, telecom and hotels and restaurants. Adhia emphasized that the government has been very sensitive towards exporters.

"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.

In addition, the review of the FTP has brought in relief amounting to Rs. 8450 crore annually for the labour-intensive sectors and micro, small and medium enterprises (MSME).

"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.

"While the implementation of GST has led to a blockage of working capital and delay in refunds, the government reiterated that the new tax system will enhance trade facilitation while benefiting exporters".

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