The Commerce and Industry Ministry has announced another extension of the current Foreign Trade Policy (FTP), now scheduled to run until September 30. The present policy had come into force on April 1, 2015, and was scheduled to run for five years until March 31, 2021.
It has now been extended up to September 30, 2021. "In view of the unprecedented situation arising out of the COVID-19 pandemic, which is persisting, the government has decided to continue benefits under various export promotion schemes by extending existing Foreign Trade Policy by another six months i.e. up to 30th September, 2021, which will provide continuity in the policy regime," the Piyush Goyal-led Commerce and Industry Ministry said on March 31.
The ministry also announced that exemption from payment of Integrated Goods and Services Tax and Compensation Cess on imports made by traders have also been extended up to September 30, 2021. This includes imports made under the Advance Authorisation scheme, Export Promotion Capital Goods (EPCG) scheme and those imports made by export-oriented units.
Similarly, the validity period of the Status Holder Certificates is also extended. This will enable the Status Holders to continue to avail the specified facilities/benefits.
Teething Troubles
However, sources said the yet-unfinished work of finalising tax refund rates for exports under the new Remission of Duties and Taxes on Exported Products (RoDTEP) scheme has derailed the government's plans of unveiling a new FTP. The lack of a clear consensus on whether to continue with export incentives for services exporters has also contributed to the latest decision.
Going live from January 1, 2021, the RodTEP scheme is the government's foremost export incentive scheme now after the shutdown of the erstwhile Merchandise Exports from India Scheme (MEIS). It aims to refund to exporters the embedded duties and taxes such as VAT on fuel used in transportation, Mandi tax and duty on electricity used during manufacturing, that were so far not being refunded. While the government has clarified that the rebate would be claimed as a percentage of the Freight on Board value of exports, it is yet to bring out the specific refund rates.
However, Commerce Department officials say that the rates are taking longer to be finalised given that the department is working with a smaller-than-expected budget for the scheme.
On the other hand, the government is yet to take a call on whether to discontinue the only central scheme promoting the export of services after shutting down India’s largest trade promotion scheme for goods, the MEIS.
Even if the flow of benefits to exporters is not completely stopped, the government may slash incentives significantly in the upcoming Foreign Trade Policy, sources in the know said. While the Commerce Department was keen to continue with the Services Exports from India Scheme (SEIS), stiff opposition from the Finance Ministry, which has recently tightened its purse strings owing to a funds squeeze — may lead to its reduction or even total demise, a senior Commerce Department official said.
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