FOREIGN TRADE POLICY

FOREIGN TRADE POLICY The Foreign Trade Policy, 2015-20 (‗FTP‘) was announced by the Hon‘ble Minister of Commerce and Industry, Smt. Nirmala Sitharaman on April 1, 2015. The FTP has been announced in the backdrop of several measures initiated by the Government of India such as ‗Make in India‘, ‗Digital India‘ and ‗Skills India‘, among others. Objectives: The FTP has been introduced,  to double India‘s share in world trade by the year 2020.  to rationalize the general provisions regarding imports and exports and also, various promotional measures offered by the Commerce Ministry  to offer a mechanism for resolving quality complaints and trade disputes. Key Highlights of the FTP  FTP is to be aligned with Make in India, Digital India & Skills India initiatives.  It has been outlined that higher level of support for export of defence, farm produce and eco-friendly products would be provided.  The benefits of the erstwhile FTP have now been consolidated into two new schemes for export of merchandise and services, i.e., Merchandise Export from India Scheme (‗MEIS‘) and Service Export from India Scheme (‗SEIS‘).  MEIS o Objective of MEIS is to offset infrastructural inefficiencies and associated costs involved in export of goods, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India‘s export competitiveness.  SEIS o SEIS is made available to ―Service Providers located in India‖ as against the existing Served Form India Scheme available to ―Indian Service Providers‖. o Objective of SEIS is to encourage export of notified Services from India.  The benefit of MEIS and SEIS has been extended to units located in Special Economic Zones – This step is imperative to boost the SEZ sector. P a g e | 23 Vajiram and Ravi  MEIS and SIES schemes provide rewards to importers and exporters in terms of duty free scrips.4  Additional Ports are now allowed to export and import which include Calicut Airport, Kerala and Arakonam ICD.  Boost to "MAKE IN INDIA" o FTP has reduced Export Obligation5 (EO) for domestic procurement in order to promote domestic capital goods manufacturing industry. o There are higher level of rewards under MEIS for export items with high domestic content and value addition.  Status Holders o Business leaders who have excelled in international trade and have successfully contributed to country‘s foreign trade are proposed to be recognized as Status Holders and given special treatment and privileges to facilitate their trade transactions, in order to reduce their transaction costs and time. o The nomenclature of Export House, Star Export House, Trading House, Star Trading House, Premier Trading House certificate has been changed to One, Two, Three, Four, Five Star Export House. o The criteria for export performance for recognition of status holder have been changed from Rupees to US dollar earnings.  Centre for Research in International Trade – is a new institution being established not only to strengthen India‘s research capabilities in the area of international trade, but also to enable developing countries to articulate their views and concerns from a well-informed position of strength.  The policy also said that two institutional mechanisms are being put in place for regular communication with stakeholders – the Board of Trade and the Council for Trade Development (CTD) and Promotion.  While the Board of Trade will have an advisory role, the CTD would have representation from State and UT governments. CTD will be an institution between the Centre and the states with the objective of to ensure participation of state government into central government policy making, implementation and monitoring. 4 Duty free scrips are explained later. 5 Export Obligation” means obligation to export products in terms of quantity, value or both, as specified by Regional or competent authority. P a g e | 24 Vajiram and Ravi  FTP also promotes e Commerce focusing on job creation.  Unlike the annual reviews of the past, the FTP will be reviewed after two-andhalf years to ensure continuity in the trade policy. What are duty-free scrips? Duty free scrips are paper authorizations that allow the holder to import inputs that go into manufacture of products that are to be exported. Such goods are imported without paying duties equivalent to the printed value on the scrip. For instance, if a duty free scrip is valued at Rs 10 lakh, the holder can use it to import such goods without paying duties up to Rs 10 lakh. Who gets duty-free scrips? Duty free scrips are given to exporters under various export promotion schemes of the government. Under these promotional schemes, incentives are given for exporting identified products and targeting specific markets fixed at a certain percentage of the export value. It is also used to reimburse duties on imported inputs as mentioned in the exmple given above