The government is considering a reduction in raw material costs to boost exports.
A simplification of norms regarding the import of raw materials and capital goods in the new foreign trade policy is on the cards.
"We are familiar with the need to provide some kind of easing as far as exports are concerned. There are ways to provide relief. Like, at times certain notional duties that increase the export obligation of exporters. Our aim is to encourage local sourcing and for that certain schemes might see rationalising," a senior official told Moneycontrol.
The government is considering simplification of export incentive schemes like Advance Authorisation Scheme. This scheme allows duty-free import of inputs for export products.
"Schemes like the Export Promotion Capital Goods (EPCG) and Service Exports from India Scheme (SEIS) are also being considered," the official said.
Through the EPCG, exporters are allowed to import a specified amount of capital goods at zero duty and SEIS seeks to incentivise exports of services like legal, engineering and medical.
The commerce ministry will also propose to count total exports of the third party as an export obligation instead of considering only proceeds realised from the third party by EPCG holders and the department will discuss the issue with the finance ministry, the official said.
"In the advance authorisation scheme, export obligation period could go up from the 18 months at present," the official said.
The upcoming policy, coming into effect from April 1, is also expected to have a special focus on e-commerce as well as provide details of the World Trade Organization (WTO)-compliant schemes.
According to government data, India’s trade deficit slipped to a seven-month low of $10.9 billion in September. Both exports and imports witnessed their steepest fall in three years.
Merchandise exports contracted 6.57 percent to $26 billion, while imports dropped 13.9 percent to $36.9 billion. Both consumption and capital-oriented imports reported a sharp fall in September.
Amid rising trade tensions, the WTO slashed its trade forecasts for 2019 and 2020 to 1.2 percent and 2.7 percent, respectively.
The International Monetary Fund also cut global economic growth forecast for 2019 by 20 basis points to 3 percent.
The IMF chief,
Kristalina Georgieva has recently said India has had a more pronounced impact of the global slowdown.
To tackle the slowdown, the Reserve Bank of India has cut key policy rates by 135 basis points since February, resulting in a a multi-year low of 5.15 percent.
However, this hasn't had the required impact when it comes to demand recovery.