Highlights of the Mid-Term Review of Foreign Trade Policy

The Union Ministry of Commerce and Industry in December 2017 released the Mid-term Review of the Foreign Trade Policy (FTP) 2015-20.

• MEIS (Merchandise Exports from India Scheme) incentives for two sub-sectors of Textiles i.e. Ready Made Garments and Made Ups increased from 2% to 4% involving additional annual incentives of Rs. 2743 crore.
• Across the board increase of 2% in existing MEIS incentive for exports by MSMEs / labour intensive industries amounting to Rs. 4576 crore.
• To provide an impetus to the services trade, the SEIS (Service Export from India Scheme) incentives have been increased by 2% for notified services such as Business, Legal, Accounting, Architectural, Engineering, Educational, Hospital, Hotels and Restaurants amounting to Rs. 1140 crore.
• The validity period of the Duty Credit Scrips has been increased from 18 months to 24 months to enhance their utility in the GST framework. GST rate for transfer/sale of scrips has been reduced to zero from the earlier rate of 12%.
• New trust based Self Ratification Scheme introduced to allow duty free inputs for export production under duty exemption scheme with a self-declaration. Under this scheme, instead of getting a ratification of the Norms Committee for inputs to be used in the manufacture of export products, exporters will self-certify the requirement of duty free raw materials/ inputs and take an authorization from DGFT. The scheme would initially be available to the Authorized Economic Operators (AEOs).

Trade Policy Reforms

• To focus on improving Ease of Trading across Borders for exporters and importers, a professional team envisaged to handhold, assist and support exporters with their export related problems, accessing export markets and meeting regulatory requirements.
• New Logistics Division created in the Commerce Department to develop and coordinate implementation of an Action Plan for the integrated development of the logistics sector, by way of policy changes, improvement in existing procedures, identification of bottlenecks and gaps and introduction of technology in this sector.
• For clarity, a negative list of capital goods which are not permitted under the EPCG (Export Promotion on Capital Goods) scheme has been notified.
• The concept of Domestic Tariff Area (DTA) sale from Export Oriented Units (EoUs) on concessional and full duty has been removed and hence, the limit on entitlement of DTA sale has also been removed. Consequently, restriction on DTA sale of motor cars, alcoholic liquors, books and tea has been removed.
• The Union Cabinet Committee on 15th December 2017, approved the special package for employment generation in leather and footwear sector. The package involves implementation of Central Sector Scheme “Indian Footwear, Leather & Accessories Development Programme” with an approved expenditure of Rs. 2600 crore over the three years from 2017-18 to 2019-20. The scheme would lead to development of infrastructure for the leather sector, address environment concerns specific to the leather sector, facilitate additional investments, employment generation and increase in production. The Special Package has the potential to generate 3.24 lakhs new jobs in 3 years and assist in formalization of 2 lakh jobs as cumulative impact in Footwear, Leather & Accessories Sector.

Multilateral Negotiations

• The Eleventh Ministerial Conference (MC11) of World Trade Organisation (WTO) ended without a Ministerial Declaration.
• In the run-up to MC11, decisions were expected on a permanent solution on food security and other agriculture issues.
• Unfortunately, the strong position of one of the member against agricultural reforms based on current WTO mandates and rules, led to a deadlock without any outcome on agriculture or even a work programme for the next two years.

The existing mandates and decisions ensure that work will go forward and members will continue to work on issues such as

• The permanent solution on public stockholding for food security purposes
• Agricultural Special Safeguard Mechanism and agricultural domestic support
• Some of the other decisions that were taken included a Work Programme on disciplines on Fisheries Subsidies with a view to arriving at a decision by MC12. It was also decided to continue with the non-negotiating mandate of the existing Work Programme on E-commerce.
• Ministerial Decisions on new issues like Investment Facilitation, MSMEs, gender and trade, which lacked a mandate or consensus, were not taken forward.

India’s Stand at Trade Negotiations

During the Ministerial Conference (MC11), India stood firm on its stand on the fundamental principles of the WTO, including multilateralism, rule-based consensual decision-making, an independent and credible dispute resolution and appellate process, the centrality of development, which underlies the Doha Development Agenda (DDA), and special and differential treatment for all developing countries.