Don't expect too much from the FTP

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Bikky Khosla | 10 Aug, 2010
Although exporters are not expecting much from the forthcoming annual review of the Foreign Trade Policy (FTP) (2009-14), in light of early signs of recovery in the sector, I feel the government could take some steps on the non-financial part.

I hope the Commerce Ministry will focus more on certain sectors including textiles, readymade garments, leather and handicraft, as they are still in the red and thus still require some intervention from the government. This is more so because some of the key markets in the European continent that are still to recover are definitely going to impact export prospects of these sectors.

Although exports have grown by over 30 percent in the first quarter of the current fiscal to around $50 billion, the prediction of the Prime Minister's Economic Advisory Council, that the year may end with $216 billion worth exports seems difficult, if not impossible to achieve.

Moreover from its earlier experiences, the Commerce Ministry would not like to be at loggerheads with the Finance Ministry by announcing a slew of sops for exporters with the latter already making it clear that it is not inclined to give any more incentives to exporters.

Amongst the measures that are likely to be announced in the review, certain fiscal incentives, reduction in the transaction and simplification of procedures can be expected. With India's traditional export markets not doing too well, the government in its forthcoming annual review of the Foreign Trade Policy should bring countries like Russia, Turkey, Ukraine, Vietnam and Nigeria under the focus market scheme. The DEPB scheme should also be extended till the introduction of goods and services tax (GST).

I however, still believe that the Commerce Ministry can do a world of good by capping export at the base rate so that exporters are able to get loans at an interest of about 8 percent. Moreover continuing schemes like duty drawback, advance authorisation, duty entitlement passbook (DEPB), duty-free import authorisation and export promotion capital goods (EPCG), extension of zero-duty EPCG scheme to all sectors for technological upgradation should also be part of the announcements.

With the annual review of the Foreign Trade Policy (FTP) (2009-14) slated to be announced in the last week of August, the best we can perhaps do now is keep our fingers crossed and hope that we get at least some reasons to smile then.