Foreign Trade Policy: FTP policy – 2015-2020

A foreign trade policy provides a set of guidelines that help a country achieve its domestic production and export goals. The Government of India and the Ministry of Commerce and Industry release Foreign Trade Policies (FTP) every five years; the previous FTP (2015-20) came into effect in April 2015. FTP 2015-20 provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in line with the ‘Make in India’ programme, an initiative by the Government of India to create and encourage companies to develop, manufacture and assemble products made in India and incentivize dedicated investments into manufacturing.

MEIS and SEIS:

FTP 2015-20 introduces two new schemes, namely ‘Merchandise Exports from India Scheme (MEIS)’ for the export of specified goods to specified markets and ‘Services Exports from India Scheme (SEIS)’ for increasing exports of notified services.

MEIS is a scheme designed to provide rewards to exporters to offset infrastructural inefficiencies and associated costs. The MEIS intends to incentivise exports of goods manufactured in India or produced in India. The incentives are for goods widely exported from India, and industries producing or manufacturing such goods to make Indian exports competitive. In addition to exports of manufactured goods, E-Commerce exports of handloom products, books/periodicals, leather footwear, toys, and customised fashion garments through courier or foreign post offices would also be able to get the benefit of MEIS (for values up to INR 25,000).

Service Exports from India Scheme (SEIS) aims to promote the export of services from India by providing duty scrip credit for eligible exports. The country exports various services, namely, travel, transportation, insurance, software – IT-BPM, business services, financial services and communication, etc. Under the Scheme, service providers located in India would be rewarded under the SEIS scheme for all eligible exports of services from India. Under the SEIS scheme, Government will give incentives in the range of 3% to 7% of Net foreign exchange Earnings to all eligible Service providers who are providing services from India to organisations outside India.

Duty Credit Scrips:

The Duty Credit Scrips and goods imported/ domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for:

1. Grants rewards in the form of Duty Credit Scrip to the exporter on the export of notified goods, which have been produced/ manufactured in India.
2. Rewards for the export of notified goods to notified markets are payable as a percentage of realized FOB value (in free foreign exchange).
3. Exports of specified goods through courier or foreign post office using e-commerce of FOB value up to Rs.25000 per consignment entitled for rewards benefit is limited on the value of Rs. 25000/- only.
4.  Scrip itself and Goods imported/ domestically procured against the scrip are freely transferable.
5. Certain specified categories of export or export goods are not eligible for benefit under the Scheme.

Export promotion scheme:

The Export Promotion Capital Goods (EPCG) scheme is a government initiative designed to promote exports by providing incentives and financial assistance to exporters. The Export Promotion Capital Goods (EPCG) scheme is a scheme that allows an exporter to import capital goods including spares for pre-production, production, and post-production at zero Customs duty, for exports. Measures have been adopted to push procurement of capital goods from indigenous manufacturers under the EPCG scheme by reducing specific export obligations to 75per cent of the normal export obligation.

Status holders:

Measures have been taken to give a boost to exports of defense and hi-tech items. Manufacturers, who are also status holders, will now be able to self-certify their manufactured goods in phases, as originating from India to qualify for preferential treatment under various forms of bilateral and regional trade agreements. This ‘Approved Exporter System’ will help manufacturer exporters considerably in getting fast access to international markets.

EOU/EHTP/STPI/BTP Schemes:

Several steps have been taken to encourage manufacturing and exports under 100 per cent Export Oriented Unit (EOU Scheme), Electronics Hardware Technology Park (EHTP Scheme), Software Technology Park (STPI Scheme), or Bio-Technology Park (BTP Scheme) for the manufacture of goods, including repair, re-making, reconditioning, reengineering and rendering of services. Under the EOU/EHTP/STPI/BTP Schemes,  units willingly to export their entire production of goods and services may be set up under the above scheme for the manufacture of goods, including repair, re-making, reconditioning, reengineering, and rendering of services. Trading units are not covered under these schemes. The steps include a fast-track clearance facility for these units, permitting them to share infrastructure facilities, permitting inter-unit transfer of goods and services, permitting them to set up warehouses near the port of export, and using duty-free equipment for training purposes.

Niryat Bandhu Scheme:

Niryat Bandhu Scheme was implemented by the DGFT to mentor new and potential exporters on the intricacies of foreign trade through counseling, training, and outreach programmes through online certificates, so that they can get into international trade. Accordingly, the ‘Niryat Bandhu Scheme’ has been galvanised and repositioned to achieve the objectives of ‘Skill India’.  The Skill India Mission is a government scheme launched in 2015.

Trade facilitation and enhancing the ease of doing business are the other major focus areas in FTP 2015-20. One of the major objectives of this FTP was to move towards paperless working in 24×7 environments.

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