CURRENT STATUS OF EXPORTS IN THE COUNTRY AND THE

POSITIVE/NEGATIVE EFFECT OF NEW FOREIGN TRADE POLICY

DECLARED LAST WEEK ON EXPORTS

Finally, after a long wait, the Centre released the Foreign Trade Policy for the term
2015-2020 and it was well worth the wait. The document is characterized by freshness
in approach and I find no dearth of reasons to cheer this superbly drafted document.
First of all, its focus on improving the ease of doing business an issue we have
discussed earlier time and again on this very platform sparks a ray of hope. In
addition, the clear road map it has laid down for exports for the coming years also
deserves praise.
In the very first chapter of the document, it is mentioned that trade facilitation is a
priority of the government. It tells about cutting down the time and transaction costs
required in exports by moving towards digitization and paperless working in a 24 X 7
environment. Several clear measures are proposed to achieve this objective and if this
policy works as envisaged, the burden of time, costs and documentation will certainly
come down significantly for our exporters.

The effort to streamline the process of export incentives is also laudable. Now,
under the Merchandize Exports from India Scheme, which replaces five different
schemes, the benefits will range 2- 5 % against 2- 7% earlier and under the Service
Exports from India Scheme, the benefits will come down to 3- 5% against 5-10%
earlier, but while sops have been reduced, they are now more in line with WTO rules.
With our economy growing and per capita income increasing, we may soon lose our
entitlement to export sops. The FTP, therefore, rightly, wants our exporters to get
prepared to run on competitive advantage instead of expecting tariff sops to come their
way.
The FTP aims at integrating our export strategy with the flagship 'Make in India'
program. It seeks to promote indigenous capital goods production by reducing Export
Obligation for domestic procurement under EPCG scheme. In case of capital goods
procured from indigenous manufacturers Specific Export Obligation has been reduced to
75% from 90% earlier. Also, it is proposed to give a higher level of rewards to products
with high domestic content and value addition.
Meanwhile, it has been reported the government is set to reintroduce the interest
subvention scheme, which lapsed in April last year, soon for some labour intensive
sectors. This is a good piece of news as the scheme has proved very beneficial for the
small and medium enterprises engaged in exports. In the Budget 2015-16, an allocation
of Rs 1,650 has been made and as the global demand is softening, I think no further
delay should be made in re-launching this scheme.