Existing foreign trade policy likely to be extended

The existing Foreign Trade Policy, which is scheduled to lapse this month-end, may be extended by six months as the government has not been able to wrap up consultations for a new policy due to the on-going lockdown aimed at checking the spread of Covid-19.

Commerce & Industry Minister Piyush Goyal is likely to make an announcement on the FTP on Tuesday to bring clarity on the measures that would be in place from April 1, 2020. The new FTP 2020-25 is likely only later this year, an official told.

“It is expected that all existing schemes and programmes for exporters and importers, that were to end on March 31, 2020, will continue for at least six months. This will give some stability to exporters in the current uncertain times apart from providing more time for consultations,” the official said.

If the current FTP (2015-20) is extended, all existing incentives and schemes will also continue. This will include the popular Merchandise Export from India Scheme (MEIS) and the Export Promotion Capital Goods (EPCG) scheme that the government has to phase out because of a World Trade Organisation (WTO) dispensation.

Exporters from most sectors are looking for an extension in policy as in the current scenario, when exports have taken a big hit due to shut-down, they do not want existing incentives to be tinkered with.

“A demand for extension of all export obligations and revalidation of all advance authorisations have also been made as exporters point out that there is delay in both exports and imports under the existing situation,” the official added.

India’s goods exports declined 1.5 per cent to $292.91 billion in April-February 2020 compared to last year. Exports increased marginally in February 2020, but are expected to dip sharply this month because of the breakdown in production, supply and payments.

“The Commerce Minister already announced earlier this month that the MEIS scheme will be gradually phased out and replaced with the new Remission of Duties and Taxes on Exported Products (RoDTEP) scheme after due consultations with stakeholders. The rates under RoDTEP will be fixed only after taking inputs from the industry and this could take six to eight months,” the official said.

The government is not time-bound to replace the MEIS, EPCG or the other schemes that a WTO panel has ruled against as India has filed an appeal against the ruling.