In the wake of declining exports, the government took various measures to boost exports in the Union Budget 2015-16 and a new Foreign Trade Policy (FTP). The Foreign Trade Policy is also known as Export-Import Policy.
A new FTP for the period 2015-20 was announced on 1 April 2015, with a focus on supporting both manufacturing and services exports and improving the ‘Ease of Doing Business’.
The new FTP aims to increase India’s exports to US$900 billion by 2019–20.
Salient Features of the FTP 2015-2020
Merchandise Export from India Scheme:
The six different schemes of the earlier FTP (Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agriculture Infrastructure Incentive Scrip, Vishesh Krishi and Gram Udyog Yojana and Incremental Export Incentive Scheme) which had varying sector-specific or actual user only conditions attached to their use have been merged into a single scheme, namely the Merchandise Export from India Scheme (MEIS).
Notified goods exported to notified markets will be incentivized on realised FOB value of exports.
Countries have been grouped into three categories–namely Category A: Traditional Markets, Category B: Emerging & Focus Markets and Category C: Other Markets–for grant of incentives.
The government has expanded the coverage of the MEIS on 29 October 2015 by adding 110 new items. The incentive rate/country coverage of 2228 items has been enhanced.
Service Export from India Scheme:
The Served from India Scheme (SFIS) has been replaced with the Service Export from India Scheme (SEIS).
The SEIS applies to ‘service providers located in India’ instead of ‘Indian service providers’. Thus it provides for incentives to all service providers of notified services who are providing services from India, regardless of the constitution or profile of the service provider.
The rates of incentivization under the SEIS are based on net foreign exchange earned. The incentive issued as duty credit scrip, will no longer carry an actual user condition and will no longer be restricted to usage for specified types of goods but be freely transferable and usable for all types of goods and service tax debits on procurement of services/goods.
Incentives (MEIS & SEIS) to be available for SEZs: FTP 2015-20 extends the benefits of the MEIS and SEIS to special economic zones (SEZ) as well, which will give a new impetus to the development and growth of SEZs.
Duty credit scrips are freely transferable and usable for payment of custom duty, excise duty and service tax. All scrips issued under the MEIS and SEIS and the goods imported against these scrips are fully transferable.
Scrips issued under these schemes can be used for the following:
(a) Payment of customs duty on import of inputs / goods including capital goods, except items listed in Appendix 3A.
(b) Payment of excise duty on domestic procurement of inputs or goods, including capital goods as per notification of Department of Revenue (DoR).
(c) Payment of service tax on procurement of services as per DoR notification. Basic customs duty paid in cash or through debit under duty credit scrip can be taken back as duty drawback as per DoR rules, if inputs so imported are used for exports.
(a) Under the Export Promotion Capital Goods (EPCG) scheme, in case capital goods are procured from indigenous manufacturers, specific export obligation has been reduced to 75 per cent. This is designed to help the indigenous capital goods manufacturing industry.
(b) Under the MEIS, export items with high domestic content and value addition have generally been provided higher levels of incentives.
(c) Hard copies of applications and specified documents which were required to be submitted earlier for incentive schemes and duty exemption schemes have now been dispensed with.
(d) Landing documents of export consignments as proof for notified market can now be digitally uploaded as specified.
(e) There will be no need to submit copies of permanent records/documents repeatedly with each application, once the same are uploaded in the exporter/importer profile.
(f) Dedicated e-mail addresses have been provided for faster and paperless communication with various committees of the Directorate General of Foreign Trade (DGFT), e.g. Norms Committee and Exim Facilitation Committee.
Recent Measures for Trade Facilitation
(a) The government has reduced the number of mandatory documents required for exports and imports to three each, which is comparable with international benchmarks. The trade community can file applications online for various trade-related schemes. Online payment of application fees through credit/debit cards and electronic funds transfer from 53 banks has been put in place.
(b) Customs single window initiative:
The Union Budget 2014-15 announced an Indian Customs Single Window Project to facilitate trade. This project envisages that importers and exporters will electronically submit their customs clearance documents at a single point with customs. Any permissions required from other regulatory agencies (such as animal quarantine, plant quarantine, drug controller and textile committee) could be obtained online without the importer/exporter having to separately approach these agencies. The single window will thus provide importers/exporters a single point interface for customs clearance of import and export goods, thereby reducing personal interface with governmental agencies, dwell time and cost of doing business.
With effect from 1 April 2015, an electronic exchange facility has been established between customs and the Food Safety and Standards Authority of India (FSSAI), the Department of Plant Protection, Quarantine and Storage (PQIS) at the Jawaharlal Nehru Port Trust (JNPT) (Nhava Sheva), inland container depot (ICD), Tughlakabad and ICD, Patparganj, for online message exchange, including no objection certificates (NOC) with/from these agencies. Other regulatory agencies such as animal quarantine, the textile committee, the drug controller of India and wildlife authorities are also being brought within the ambit of single window customs clearance.
(c) 24×7 customs clearance:
With effect from 31 December 2014, the facility of 24×7 customs clearance for specified imports, namely goods covered under ‘facilitated’ bills of entry, and specified exports, namely factory stuffed containers and goods exported under free shipping bills, have been made available at 18 seaports. Similarly, the facility of 24×7 customs clearance for specified imports, namely goods covered by facilitated bills of entry and all exports, namely goods covered by all shipping bills has been extended at 17 air cargo complexes. This will help in faster clearance of such import and export goods, reduce dwell time and lower the transaction cost.
(d) One of the major objectives of the new FTP is to move towards a paperless 24×7 working environment. A new facility has been created to upload documents in exporter/importer profile so that exporters are not required to submit documents repeatedly.
(e) Attention has also been paid to simplifying various ‘aayat niryat’ forms, bringing in clarity in different provisions, removing ambiguities and enhancing electronic governance.
(f) The Directorate General of Foreign Trade (DGFT) has launched a new-look website, making it more user-friendly and easy to navigate. The DGFT website has a large dynamic component whereby the trade community can file applications online for importer exporter code (IEC) and various other schemes of the DGFT. Exporters can also see the status of their electronic bank realization certificates almost in real time. The website is rich in content with all documents related to FTP along with a responsive online grievance redressal system.
(g) The DGFT launched a ‘DGFT’ mobile application in June 2015. The application allows exporters/importers to access foreign trade policy and other related documents in an easy-to-use searchable format and check status of transmission of various authorizations and shipping bills, etc.
(h) Training/outreach programmes for exporters:
- The Niryat Bandhu Scheme has been galvanized to achieve the objectives of Skill India. Outreach activities are being organized at MSME (micro, small and medium enterprises) clusters with the help of export promotion councils (EPCs) and other willing ‘industry partners’ and ‘knowledge partners’. More than 20,000 entrepreneurs have been given exposure by DGFT regional offices under the Niryat Bandhu Scheme. In September 2015, the DGFT in collaboration with the Indian Institute of Foreign Trade (IIFT) has launched ‘Niryat Bandhu at Your Desktop’, an online certificate programme in export import business.
- An ambitious outreach programme has been launched by the Department of Commerce (DoC) for exporters located in the major export clusters/cities. The programme focuses on:
- Training exporters to utilize free trade agreements (FTA).
- Taking inputs from exporters on FTAs under negotiation, for example the Regional Comprehensive Economic Policy (RCEP).
- Promoting awareness about the contents of the www.indiantradeportal.in launched by the DoC.
(i) Other important measures
- A Council for Trade Development and Promotion has been constituted in July 2015 to ensure continuous dialogue with the governments of states/ union territories (UT) on measures for providing an international trade-enabling environment and for making the states active partners in boostingIndia’s exports. The first meeting of the council was held on 8 January 2016.
- The state/UT governments have been requested to develop their export strategy, appoint export commissioners, address infrastructure constraints restricting movement of goods, facilitate refund of value-added tax (VAT)/octroi/state-level cess, address other issues relating to various clearances and build capacity of new exporters in order to promote exports. States and UTs have also been issued user-ids and passwords to facilitate access to the foreign trade database maintained by the Directorate General of Commercial Intelligence & Statistics (DGCI&S) to extract the export data relating to their states.