With the aim of doubling India’s export of merchandise and services by the year 2020, the Indian Commerce and Industry Ministry has today (1-4-2015) announced the new Foreign Trade Policy 2015-2020 (FTP).
According to the FTP statement, the Policy seeks to accelerate exports through various schemes intended to exempt and remit indirect taxes on inputs physically incorporated in the export product, import capital goods at concessional duty, stimulate services exports and focus on specific markets and products. It is however stated that in future, India’s export promotion efforts have to move away from incentives and subsidies alone in order to comply with the WTO’s Agreement on Subsidies and the Countervailing Measures.
The new FTP announces two new export promotion schemes for exports made on or after 1-4-2015 – one for promotion of export of goods and another for promotion of export of services. 5 different schemes for promotion of export of goods namely, Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip and Vishesh Krishi Gram Udyog Yojana (VKGUY), have been merged into one scheme called Merchandise Exports from India Scheme (MEIS). Similarly, Served From India Scheme (SFIS) has also been replaced with the new Service Exports from India Scheme (SEIS).
Both the duty credit scrips and goods imported / domestically procured against them shall be freely transferable, and can be used for payment of Customs duty, Central Excise duty or Service tax on procurement of goods or services. Notifications allowing such exemptions in this regard from the Ministry of Finance are however awaited.
While, benefit under MEIS shall be payable as percentage of realized FOB value, the new FTP also states that debits towards Basic Customs Duty in the scrips would also be allowed adjustment as duty drawback. In respect of services export, the new FTP mentions that the benefit of the new scheme would be available to service providers located in India. It may be noted that the old Policy used the words “Indian Service Providers” which were however read down by the Delhi High Court recently to grant benefit to even Indian subsidies of foreign companies.
The new Foreign Trade Policy also announces host of trade facilitation and ease of doing business measures like online filing of documents, online inter-ministerial consultations, simplification of various procedures, digitization, etc. Export Oriented Units (EOUs) have also been given few incentives to boost exports.