The commerce ministry will issue a revised Foreign Trade Policy 2015-20 tomorrow, after a mid-term review. For preparatory work, the Directorate General of Foreign Trade (DGFT), has asked all its officers at the Delhi headquarters to attend office on all days of the week till the revised FTP is released.
The 2015-20 policy was issued on April 1, 2015. So, the mid-term review was due by end-September 2017. There were moves to advance this to coincide with introduction of Goods and Services Tax (GST) laws but that did not happen. The later deadline of September 30 was also not adhered to, as the GST regime had not stabilised. However, amendments to the FTP and procedures were being notified. It appears the ministry now feels the time is ripe to notify the revised FTP and assure exporters of continuation of promotion schemes. The revised FTP and procedures should also bring their various provisions in alignment with GST laws.
In various interactions, the new commerce minister, Suresh Prabhu, has signalled a shift in manufacturing and export strategy, with a focus on new emerging sectors such as genomics. He has talked of India’s political relationships with African countries and countries such as Cuba to push exports to new markets. In a refreshing statement, he said by becoming part of global supply chains, exporters create constituencies in other countries. He is working on the launch of ‘Make in India 2.0’ for services, where the thrust will be on greater presence in global arena.
He has said the government is in the process of setting up a new organisation to promote export to different regions, developing global linkages. He asked gem and jewellery exporters to suggest a new package of incentives. He made a case for Indian players taking a shot at the luxury goods sector, to ramp up export to different markets. Overall, he seems keen on a credible plan, based on market research, and implementing it.
Prabhu has pleaded for treating support measures to promote export as investment, not subsidies, arguing that outbound shipments contribute in a big way to boosting of growth. He emphasises that export can benefit the economy in a much shorter term than any other economic activity. His encouraging words come when export growth has dived into negative territory and entities in the sector struggle to get refund of taxes paid on shipped goods, as well as refund of the unutilised input tax credit on account of export without payment of tax. He has recognised that there are many issues with regard to GST refund and said he is constantly taking up these with the finance ministry.
As a chartered accountant from Mumbai, the minister does understand how businesses work. As a professional, he has no political agenda. He has a reputation for giving primacy to merit and not get swayed by short-term gain. In his stint as minister of railways, he shunned populism and opted for structural reform. So, the expectations from Prabhu are quite high and, hopefully, he will restore the confidence of exporters that has taken a beating in the past few months.