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Highlights of Mid-term review of Foreign Trade Policy (December 2017)

On 5th December 2017 (Tuesday), our government released the much awaited mid-term review of Foreign Trade Policy (FTP), with a focus on policy measures to boost the exports of goods and services and to increase employment generation along with value-addition. As a part of the same, DGFT has updated the current Foreign Trade Policy by adding a few more benefits, increasing incentives, and simplifying DGFT procedures.

Following are the highlights of the updated policy:

GST Related Reforms:

Issue of working capital blockages has been addressed

MEIS related updates:

Scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) enhanced.MEIS incentives for two sub-sectors of Textiles i.e. Ready Made Garments and Made Ups increased from 2% to 4% involving an additional annual incentives of 2743 Crore

Across-the-board increase of 2% in existing MEIS for exports by MSMEs/labour incentive industries (Rs 4,567 crore)

GST rate for transfer/sale of scrips has been reduced to zero from the earlier rate of 12%

SEIS related updates:

  • SEIS incentives raised by 2 per cent with a view to boosting services sector exports (Rs 1,140 crore). Sectors include Business, Legal, Accounting, Architectural, Engineering, Educational, Hospital , Hotels and Restaurants and more
  • Validity of Duty Credit Scrips increased from 18 months to 24 months to enhance their utility in GST framework
  • GST rate for transfer/sale of scrips has been reduced to zero from the earlier rate of 12%
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New Trust Based Self Ratification Scheme For Duty Free Import Of Raw Material:

  • This scheme has been 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
  • This scheme will initially only be available for Authorised Economic Operators (AEO)
  •  

Enhanced value limit on the free of cost exports:

  • Status holders are entitled to export freely exportable items on free of cost basis for export promotion subject to an annual limit of Rupees 1 crore or 2% of average annual export realization during preceding three licensing years, whichever is lower
  • For Pharma exports, the yearly limit would be 2% of the annual export realization during preceding three licensing years

 

Other operational highlights:

  • To focus on improving ease of trading across borders for exporters and importers
  • Professional team to handhold, assist and support exporters in accessing markets, meeting regulatory norms
  • Establishment of New Logistics Division to promote integrated development of the logistics sector
  • Establishment of state-of-the-art trade analytics division in DGFT for data-based policy actions
  • New agricultural exports policy to focus on increasing exports of value-added agri products
  • New Services Division in DGFT to examine Exim policies and procedures to push services exports
  • Supplies of goods and services to SEZs to be treated as zero rated under GST
  • Import of second hand goods for repair/refurbishing/re- conditioning/re-engineering made free
  • Increase focus on exploring new markets and products, raising share in traditional markets and products
  • Promotion of exports by MSMEs and labour intensive sectors to increase employment opportunities for youth
  • To enhance participation of Indian industry in global value chain

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