Recent Changes in Trade Policy

11/02/2020 0 By indiafreenotes

The commerce ministry is considering rationalising and simplifying certain export promotion schemes such as EPCG in the next foreign trade policy, which provides guideline and incentives for increasing shipments, an official said.

The ministry is in consultation with all stakeholders for the preparation of the next policy (2020-25), as the validity of the old one ends on March 31, 2020, the official said.

The ministry may also include new chapters for services, and e-commerce exports besides simplifying advance authorisation and self ratification schemes.

EPCG is an export promotion scheme under which an exporter can import certain amount of capital goods at zero duty for upgrading technology related with exports.

On the other hand, advance authorisation is issued to allow duty free import of inputs, which is physically incorporated in export product.

Total exports of third party could be counted as export obligation instead of only proceeds realised from third party by EPCG holders, the official said.

Similarly in the advance authorisation scheme, export obligation period could be enhanced from the current 18 months.

For the export oriented units, the ministry is considering getting policy formulation, regulation and administration under one roof.

The ministry’s arm directorate general of foreign trade (DGFT) is formulating the policy.

At present, tax benefits are provided under merchandise export from India scheme (MEIS) for goods and services export from India scheme (SEIS).

In the new policy, changes are expected in incentives given to goods as the current export promotion schemes are challenged by the US in the dispute resolution mechanism of the World Trade Organisation (WTO).

Against this backdrop, the government is recasting the incentives to make them compliant with global trade rules, being formulated by Geneva-based WTO, a 164-nation multilateral body.

Exporters are demanding incentives based on research and development, and product-specific clusters under the new policy.

Ludhiana-based Hand Tools Association President S C Ralhan said the new policy should have provisions for refund of indirect taxes like on oil and power, and state levies such as mandi tax.

During April-September 2019, exports were down 2.39 per cent to USD 159.57 billion while imports contracted by 7 per cent to USD 243.28 billion. Trade deficit during the period narrowed to USD 83.7 billion as against USD 98.15 billion in April-September 2018-19.

8 Important Changes in Foreign Trade Policy 2015-2020

  1. Five different schemes(Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri Infrastructure Incentive Scrip, VKGUY) merged into single unconditional scheme named as Merchandise Export from India Scheme(MEIS).
  2. SFIS(Serve from India Scheme) has been replaced by Service Exports from India Scheme(SEIS) so as to allow benefits to all services providers located in India, instead of Indian Service Providers. This amendment has been made to abide by the recent verdict pronounced by Hon’ble Delhi High Court in case of YUM RESTAURANTS(I) Pvt. Ltd. V. UOI & Ors.
  3. Scrips as well as goods under both the aforesaid schemes shall be fully transferable.
  4. MEIS benefit shall be computed on basis of FOB value of exports, whereas benefit under SEIS shall be based on Net foreign exchange earned.
  5. Rates under SEIS shall be 3% and 5%, depending on nature of industry notified.
  6. Import of capital goods under EPCG Authorisation Scheme shall not be eligible for exemption from payment of anti-dumping duty, safeguard duty and transitional product specific safeguard duty.
  7. Scrips under both the schemes can be used for the payment of customs duty, excise duty and service act at the time of procurement;
  8. Certificates by CA/CS/CWA, etc. shall be allowed to be uploaded electronically(digitally signed).