Aiming to streamline export sops, the commerce ministry is likely to consolidate a host of schemes, such as focus market, focus product and market-linked focus product, as a single scheme in the foreign trade policy (FTP) to be released on Wednesday.

A government official speaking under condition of anonymity said the aim is to simplify the export subsidy regime. “At present, duty credit scrips for such schemes are around of 2-4% of the total value of exports. Scrip with a higher rate is proposed under the new consolidated scheme,” he added.

The FTP 2015-20—like the Plan document released by the erstwhile Planning Commission—charts a five-year path for boosting exports with set milestones which are reviewed every year. The previous FTP (2009-14) expired in April last year and a new policy was expected to be released after the National Democratic Alliance government took charge in May. However, differences between the finance ministry and the commerce ministry on the amount to be allocated for export schemes has delayed the FTP by a year.

The Focus Market Scheme (FMS) aims to offset high freight costs and other externalities to select international markets with a view to enhance India’s export competitiveness in these markets. The objective of the Focus Product Scheme (FPS) is to promote exports of products that have a high export intensity and employment potential, so as to offset infrastructural inefficiencies and other associated costs involved in the marketing of these products. The Market-linked Focus Product Scheme (MLFPS) is another kind of FPS but linked to exports to identified countries. Other similar schemes, such as the Special FMS and Special PMS, are also likely to be integrated into the proposed new scheme.

In the 2013-14 annual supplement to the FTP, the total number of countries under FMS and Special FMS were increased to 125 and 50, respectively. During the same year, 47 new products were added under MLFPS from the engineering, auto components and textiles sectors while Brunei and Yemen were added as new markets under the same scheme.

Independent foreign trade analyst T.N.C. Rajagopalan said there is an opportunity and scope to integrate the market and product-specific schemes as other schemes such as the interest subvention scheme and the export promotion capital goods (EPCG) scheme are time-tested schemes.

“However, the government has to keep in mind that any such integrated scheme is compatible with the World Trade Organization rules. The government may be thinking in line with the earlier duty-free credit entitlement scheme which was introduced in 2003 by then commerce minister Arun Jaitley (and later withdrawn by the United Progressive Alliance government),” he added.

Rajagopalan said the FTP may also make the right noises about integrating the export strategy with the Make in India and Digital India initiatives.

The official cited earlier also said the Duty Free Import Authorization (DFIA) Scheme, which enables duty-free import of inputs required for export production, is also proposed to be modified, while certain sections of its users may be excluded from the scheme.

India’s merchandise exports contracted for the third consecutive month in February by a record 15% to $21.5 billion. Even though the US economy is doing better than expected, uncertainty in the euro zone due to the threat of Greece exiting the economic union have affected India’s exports. The high level of rupee appreciation has also made Indian shipments uncompetitive. In the past two months, the rupee has appreciated 10-12% based on the real effective exchange rate, which has blunted India’s edge in exports.

The International Monetary Fund on Wednesday said external risks to the Indian economy emanate from a prolonged period of weak global growth, which could dampen Indian exports, apart from any unexpected developments in the course of US monetary policy normalization, particularly against the backdrop of recent large capital inflows.

Source:- livemint.com