CA Varun Vijaywargi
The Foreign Trade Policy, 2015-2020 (‘FTP’) was finally announced by the Hon’ble Minister of Commerce and Industry, Smt. Nirmala Sitharaman on April 1, 2015. The FTP has been announced in the backdrop of several measures initiated by the Government of India such as ‘Make in India’, ‘Digital India’ and ‘Skills India’, among others.
The FTP, introduced with a view to double India’s share in world trade by the year 2020, rationalizes the general provisions regarding imports and exports and promotional measures offered by the Commerce Ministry and also offer mechanism for resolving quality complaints and trade disputes.
Key Highlights of the FTP
Chapter 3 benefits of the erstwhile FTP have now been consolidated into two new schemes for export of merchandise and services, viz. Merchandise Export from India Scheme (‘MEIS’) and Service Export from India Scheme (‘SEIS’).
- MEIS subsumes five existing schemes, viz. Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY; and
- MEIS reward rates (2%/3%/5%) specified for export of notified goods to notified markets [categorized into 3 groups, viz. Country Group A, B and C] as a percentage of realized FOB value in free foreign exchange.
- SEIS available to “Service Providers located in India” as against the existing Served Form India Scheme available to “Indian Service Providers”; and
- SEIS reward rates (3%/5%) specified for export of notified services and would be based on net foreign exchange earned.
Special Provisions applicable to MEIS and SEIS
- The duty credit scrips and the goods imported against these scrips will now be freely transferable;
- The duty credit scrips can be used for payment of Customs duty, Excise duty, Service tax and fees for defaults relating to Advance Authorization; and
- The benefit of MEIS and SEIS has been extended to units located in Special Economic Zones – This is a welcome step and is imperative to boost the SEZ sector.
- The terminology of existing status holder categories modified to One, Two, Three, Four and Five Star Export House;
- The criteria for measuring export performance meant for recognition of status holder have been changed from Indian Rupees to US dollar earnings. Further, apart from export performance of current year, only two previous years will be considered as against the previous three years under the erstwhile FTP; and
- Manufacturer status holders shall be entitled to self-certify ‘Certificate of Origin’.
Trade Facilitation and Ease of doing Business
Under online filing of documents/applications and paperless trade in 24×7 environment, few important proposals are:
- Development of an online procedure to upload digitally signed documents by Chartered Accountant/Company Secretary/Cost Accountant;
- Creation of importer/exporter profile to eliminate repeated submission of copies of permanent records/documents (e.g. IEC, Manufacturing License, RCMC, PAN etc.) with each application; and
- Online facility for filing of TED refunds.
Other Key Highlights
- Export Obligation reduced from 90% to 75% for domestic procurement under EPCG scheme to boost the ‘Make in India’ initiative;
- Higher reward under MEIS for products with high domestic content and more value addition in India;
- 10% of the cases to be selected on random basis (per month) as a risk measurement initiative, where scrips have already been issued – This may lead to verification of original documents for detailed examination;
- DGFT to leverage information and have access to database of CBDT [for PAN] and MCA [for DIN]; and
- A new chapter introduced on ‘Quality Complaints and Trade Disputes’.
The transition to this new FTP will be such that the eligibility, entitlement, transferability, usage of scrip and any other condition for export of goods or rendering of the services up to March 31, 2015 will be governed by the earlier FTP.
The new FTP is highly applaudable as it purely focuses on simplification and merger of incentive schemes, giving boost to flagship initiative of the Government, viz., ‘Make in India’ and enabling Trade Facilitation and Ease of Doing Business. All in all, the new FTP justifies the popular idiom “Der Aaye Parr Durust Aaye”.
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