Why the extension of the foreign trade policy could help enhance cross border trade
The current Foreign Trade Policy (FTP), which was set to lapse on March 31 this year, has yet again been extended. The policy has been delayed multiple times since April 1, 2020, largely due to the pandemic. However, this time there are various factors that have come into play– namely the ongoing global supply chain crisis, the geopolitical tensions between Russia and Ukraine, and the irregularity in the Covid-19 norms worldwide.To get more news about fxsway, you can visit wikifx.com official website.
On the other hand, Indian exports have outperformed in recent months and have achieved its ambitious target of $400 billion. This speaks volumes about Indian MSMEs and their resilience as they contribute around 50% to the country’s exports. With Indian MSMEs set to achieve their next leg of growth, this extension presents us with an opportunity to analyze the current FTP and visualize how it can be improved to enhance the export potential of ‘Brand India.’
The FTP 2015-2020 has helped facilitate both policy and procedural streamlining. The formulation of the Service Exports from India Scheme (SEIS) and the erstwhile Merchandise Export from India Scheme (MEIS) are examples of the same. SEIS, which replaced the Served from India Scheme (SFIS), extends benefits to service providers located in India and removes restrictions pertaining to scrips use. On the other hand, the former MEIS scheme provided exporters duty credit scrips to enhance the competit ..
To replace MEIS, the government launched the Refund of Duties and Taxes on Exported Products (RoDTEP) scheme, which has been effective since early this year. The scheme extends benefits to various sectors, including automobiles, electronics and the electrical industry, agriculture, gems and jewelry, and leather. It promises to facilitate the digitization of trade procedures and the rebate system by maintaining an electronic ledger and issuing e-scrips. RoDTEP intends to encourage exporters to be ..
Moreover, the government has expressed its priority to work on the Special Economic Zones (SEZ) policy announced in this budget to make it WTO compliant. Creating our future policies and schemes that adhere to the WTO regulations is a serious task that policymakers have to work toward addressing in the interim. This will ensure India’s export ambitions comply with the WTO mandates to bolster stakeholder confidence and avoid disputes on the international front.
The current FTP also allows the exporters to claim GST refunds on account of IGST paid for goods/services exported and under a bond without the tax payment. SEZs with zero-rated supplies can also claim IGST refunds. Furthermore, scrips can be utilized for various duties, including transitional product-specific safeguard duty, basic customs duty, and antidumping duty for articles covered under the GST scheme.
The MSME sector can gain access to duty credit scripts ranging from 2-7% of the Free on Board (FOB) value of exports. Additionally, the export performance of MSMEs is given double the weightage while examining the parameters for the Status Certificate. The Directorate General of Foreign Trade (DGFT) is also training 90 MSME clusters by strengthening their knowledge of international trade protocols. Also, measures are being taken to develop a robust logistics network through technological interve ..
The export product portfolio could be made more diverse and competitive by recognizing products with the GI tag. The use of the GI tag lends authenticity to Indian products, reinforces buyer confidence, and fetches significantly better pricing for the products. Recently, commerce minister Piyush Goyal also spoke about capitalizing on the very possibility of attaining GI tags for Indian spices to promote ‘Brand India’ on a global scale.
The progress made on the digitization front could further be expanded to recognize the potential of e-commerce in cross-border trade. This could be especially beneficial to small companies which no longer have to deal with shipment and shipment analytics. Instead, such businesses can leverage the strong logistics network and customized analytics that e-commerce offers to reduce the hassles associated with cross-border trade compliance.