New Delhi, February 5, 2017
Commerce Ministry to begin consultations next week
Exporters, who were largely ignored in the Budget, can hope for some incentives and thrust in the mid-term foreign trade policy (FTP) review in September with the Commerce Ministry ready to begin consultations.
“The Commerce Ministry will kick-off consultations with various export bodies and councils from February 9 to examine their list of demand and re-assess growth potential,” a government official told BusinessLine.
While the Economic Survey for 2016-17 circulated on the eve of the Union Budget made a case for more support for exporters, especially from labour-intensive sectors such as apparels, leather and footwear, the Budget had no specific sops.
“Exporters had made a number of demands such as creation of an export development fund, extension of interest equalisation scheme for merchant exporters and exemption for service tax to be resolved in the Budget. The FTP review is another window for exporters to have their demands examined and met,” the official said.
The FTP review would also address issues that might creep up for exporters after the Goods & Services Tax is implemented.
“In the review, we plan to address all concerns that exporters may have on the implementation of the GST and its implications,” the official said.
India’s goods exports, which posted a decline in the past two fiscal years, is finally starting showing some growth in the on-going fiscal with four consecutive months of increase since September 2016. Global economic uncertainties, however, persist and the expectations that higher exports could push up the GDP by one percentage point 2017-18, articulated in the Economic Survey, is still a pipe dream.
“Exports have started looking up but the ground is still shaky. For high growth next fiscal, exporters would definitely need more hand-holding. The FTP review will examine the growth potential in every sector and the additional incentives that could be provided,” the official added. Exporters are disappointed with the Budget for ignoring their key demands. “The global challenges highlighted in the Budget require us to be on our toes and revisit our strategy to push exports in such volatile global conditions. It is disappointing that our proposal for an aggressive marketing strategy through an Export Development Fund did not see the light of the day,” said FIEO President SC Ralhan.
The Commerce Ministry has already made a case for expansion of the popular MEIS scheme to the Finance Minister. The scheme allows eligible exporters duty-free scrips, based on a percentage value of their exports (ranging between two per cent and five per cent), which can be used to import inputs by the exporter or sold to other entities.
“We want more items to be covered and higher levels of incentives for certain sectors requiring more support. Once our sectoral consultations are over, we can make more specific demands,” the official said.
The Commerce Ministry may have to prune the ambitious target of goods and services export of $900 billion set for 2020 fixed in the five year foreign trade policy.
“We could fix a new target after our sectoral consultations are over,” the official said.
[The Hindu Business Line]