Foreign trade: Current policy to be extended by six months to Sept 30

A new FTP, which is being firmed up keeping in view fresh external headwinds as well as opportunities, is expected to be hammered out by then.

The government is set to extend the validity of the current foreign trade policy (FTP), which provides a road map for boosting external commerce in goods and services, by six months through September 30, a senior official told FE.

The extension will lend predictability to the policy regime for exporters and enable them to continue to get incentives under a clutch of extant programmes without any hiccups at a time when the Russia-Ukraine war has caused massive disruptions in global supply chains and impaired their ability to honour supply commitments on time.

A new FTP, which is being firmed up keeping in view fresh external headwinds as well as opportunities, is expected to be hammered out by then.

Merchandise exporters are currently entitled to support under a clutch of programmes, including tax remission schemes (RoDTEP and RoSCTL), interest equalisation scheme and transport subsidy scheme (for farm exports).

The validity of the current FTP for 2015-20 was already extended by two years through March 31, 2022, in the wake of the Covid-19 pandemic, mainly to maintain policy stability and soften the blow to exporters.

The government has earmarked Rs 21,340 crore for the Remission of Duties and Taxes on Exported Products and the Rebate of State & Central Taxes and Levies in the Budget for FY23. Similarly, under the interest equalisation scheme, the government has budgeted Rs 2,622 crore for FY23, against Rs 3,151 crore (RE) for FY22.

Under the recently-revamped equalisation scheme, large manufacturing and merchant exporters will get an interest subsidy of 2% on pre-and post-shipment rupee credit for the outbound shipment of 410 products. Similarly, the subsidy for manufacturing MSMEs is pegged at 3%.

The incentives are crucial to achieve sustained growth in exports and bolster the country’s share in global merchandise shipments, which stood at just 1.7% in the pre-pandemic year of 2018 and 1.6% in 2020.

Earlier this week, India’s merchandise exports exceeded an ambitious target of $400 billion for FY22 nine days before the fiscal year is set to end, staging a smart rebound after a 7% slide last fiscal in the wake of the Covid outbreak and surpassing the previous high by a wide margin. The government now expects goods exports to hit $410 billion by the end of this fiscal.