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Foreign Trade Policy (FTP): Review


Every 5 year foreign trade policy is made which gives a roadmap to enhance the export. The present FTP is for period 2005- 2020. To understand it background and its provision refer the FTP lecture series. In month of December, 2017 the mid-term review of FTP had been done.

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FTP Review: Main points

1.  The value of new incentives is Rs. 8,000 crore.

  • Rs 749 crore for leather and footwear,
  • Rs 1354 crore for agriculture and related items,
  • Rs 759 crore for marine exports,
  • Rs 369 crore for telecom and electronic items,
  • Rs 921 crore for handmade carpets,
  • Rs 193 crore for medical and surgical equipments,
  • Rs 1140 crore for textiles and readymade garments.

2.  Incentives for goods exports is Rs. 4,567 crore, and for services exports is Rs. 1,140 crore.

3.  Under MEIS/SEIS scheme incentive has been increased from 2% to 4% for labour intensive MSME e.g. Textiles Sector

4.  Increase in the validity period of duty-free credit scrips to 24 months from 18 months to enhance their utility in the GST framework

5.  A single point of contact on foreign trade.

6.  Data Based Policy Action: It proposes to set up a logistics arm in the commerce ministry and a trade analytics division for data-based policy actions

7.  An e- wallet is also proposed to be set up to address the liquidity problems faced by exporters.

8.  Exporters will self-certify the requirement of duty free raw materials/ inputs under Authorized Economic Operators (AEOs).

9.  Encouraging export of agricultural products

10. Allowing Specified Nominated Agencies to import Gold without payment of IGST

11.  Support to Export Credit Guarantee Corporation is also being enhanced to increase insurance cover to exporters particularly MSMEs exploring new or difficult markets.

12.  Help of professional team to handhold, assist and support exporters in their export related problems.

Effect of GST on exports = Negative

1. Filing large number of returns

2. Withdrawal of duty draw back scheme (except on custom duty),

3. No refund mechanism of unutilised input tax credit under GST for cotton fibre and man-made textile

4. Deemed Exporter has not been recognised under GST framework

Recommendation of Parliamentary committee on Impact of GST on Export

1. Automatic system for claiming refunds

2. Formal mechanism for grievance redressal of exporters

3. Continuing duty drawback rates as before the introduction of GST till Jun 30, 2018 or till the Department of Revenue works out revised duty drawback rates

4. Clarification about the qualifying supplies as deemed exports, and extend export related benefits to them

5. Remove Reverse Charge mechanism and bring some alternate mechanism for SEZ

  • Normally, the supplier of goods or services pays the tax on supply. In the case of Reverse Charge, the receiver becomes liable to pay the tax, i.e., the chargeability gets reversed.
  • Generally done when supply from an Unregistered dealer to a Registered dealer occurs

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