New Delhi: The mid-term review of India’s Foreign Trade Policy (FTP) factoring in the impact of GST was unveiled by the government on Tuesday, granting additional Rs 8,450-crore incentives for exporters in yet another move to boost trade and create employment.
Releasing the FTP 2015-20 mid-term review, originally slated for issue earlier in July, Commerce Minister Suresh Prabhu noted that exports were a strategic part of India’s economic policy and said the Goods and Services Tax (GST), which also impacted exporters, was the most exhausive indirect tax regime to have been implemented globally.
“The GST is the most complex tax regime implemented anywhere in the world in terms of volume and scale … a system in which so many states are involved” in changing over from the earlier system of multiple taxes, Prabhu said.
He compared the complexity of GST with the much simpler system of direct taxes codified in the Income Tax Act, 1961, that had been subjected to “innumerable amendments” over the years.
The implementation of GST had created a number of issues for exporters particularly regarding refunds on tax paid and input tax credit (ITC), which were subsequently addressed by the GST Council.
The mid-term review underlined that the FTP was a “dynamic” document and consultations with exporters was a continuous process.
“The revised FTP focuses on… leveraging benefits of GST by exporters; close monitoring of export performances and taking immediate corrective measures based on state-of-the-art data analysis; increasing ease of trading across borders; and increasing the realisations from Indian agriculture-based exports,” the Commerce Ministry said in the Foreign Trade Policy Statement 2017.
Tuesday’s announcement includes a 2 per cent increase each in incentive rates of the Merchandise Exports from India Scheme and Services Export from India Scheme. The value of new incentives is Rs 8,450 crore, accounting for 33 per cent of the total incentives of Rs 25,000 crore, according to Director General of Foreign Trade (DGFT) Alok Chaturvedi.
“Trade accounts for 45 per cent of the country’s GDP, while the export incentives announced so far cover two-thirds of the approximately 12,000 lines of items,” Commerce Secretary Rita Teaotia said in her address.
Adopting a trust-based approach, the government has introduced self-certification scheme for duty-free imports.
Of these incentives, Rs 749 crore is for leather and footwear, Rs 1,354 crore for agriculture and related items, Rs 759 crore for marine exports, Rs 369 crore for telecom and electronic items, Rs 921 crore for handmade carpets, Rs 193 crore for medial and surgical equipment and Rs 1,140 crore for textiles and readymade garments.