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Last updated: 12 Nov, 2014  

ftp-thmb.jpg FTP: The long delay must end

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Bikky Khosla | 11 Nov, 2014

Seven months of the current financial year are already over, but the government is yet to announce the Foreign Trade Policy. Usually, FTPs are announced soon after the Union Budget is presented, but this year, the matter is still up in the air. According to a media report last week, the announcement may be delayed further as the government is yet to take a final decision on granting tax incentives to export promotion schemes. Earlier this month, another report had even added that the existing policy might be extended till the end of the calendar year. This uncertainty is not welcome for the exporter community.

Recently, I have had some discussion with a number of exporters about this and most of them are of the opinion that the delay in announcement of the forthcoming FTP, which will include both an annual plan and a five-year long-term policy, is hurting their confidence. While pricing products, exporters take into account of the sops they get under export incentive schemes, but due to the ongoing uncertainties over the FTP, they are finding it difficult to do their costing while contracting for new orders. Though the general belief is that the current incentive schemes will continue till a new policy is in place, to be sure they want a formal extension of the schemes. More importantly, I think FTP is too important a matter to be left unattended for such a long time.

A recently released report shows that India's manufacturing exports have increased nearly 14 times from what they were in 1991-92 while during the same period services exports have witnessed nearly a 50-fold growth. In other words, we have not succeeded much - unlike China - to make our local industries competitive and shift from farms to factories, despite adopting free-market principles since 1991. Within the manufacturing sector, the report adds, exports from labor-intensive sectors have languished against a fast-paced growth in exports of capital-intensive goods, showing again our failure to materialize the transition. We have to reverse these trends to realize India's manufacturing dream, revived by our new political leadership.

Meanwhile, there is some positive development on GST. In a speech, the Finance Minister has said that the Centre is in the final stages of talks with the states on the issue. I think the earlier the two sides come to an agreement, the better it is for the Indian industry. The new tax regime will bring an end to dozens of taxes and, as a result, our businesses will get rid of the confusion created by the present tax regime with multiple authorities and different jurisdictions levying multiple taxes on different aspects of a business. They will also be able to reduce costs in many cases.

I invite your opinions.

 
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Editorial - Long delay in FTP
Siddharth Jhawar | Fri Nov 14 13:46:42 2014
The biggest issues for expansion and growth of Industry has been the following: 1) Imperfect Taxation structure. 2) Land 3) Logistics 4) Labour Laws. Litigation on account of Cenvat, State Vat refunds, Non availability of Land for the small and medium enterprise or any enterprise is the starting point. There is no land available despite government promises of Land Banks. Roads and logistics still a major bottle neck in eastern India. Customs and CE are a pain to deal with at the lower levels. Labour Laws are increasingly difficult to allow entrepreneurs to work with suitable people. MNREGA has caused such a social upheaval that has created a generation of people who will not work or get money without working. Labour dynamics have changed not because people are getting free money. Skills distributed by Govt. Polytechnics and Engineering colleges are virtually fake and people who graduate do not have skills of even 5 levels below. MBA, B.Tech, Diplomas being given our are useless and only filling pockets of politicians and so called educational institution. A different kind of real estate use.


Not competitve
Bill | Thu Nov 13 22:25:37 2014
We buy product in many countries. Our experiences with India business has been a dismal and costly failure.We love India and her people but we have lost many thousands of dollars with goods that were suitable for the scrap bin only once here in the USA. We have shifted our manufacturing to China and amazingly to the USA and UK where quality standards are light years ahead of India. Until Indian industry grasps the meaning of quality the amount of repeat sales will be minimal. We are very slow to consider Indian companies when starting a new project. Our combined business in USA/UK/China is $1.5M USD so we are but a tiny player, perhaps bigger manufacturers such as Harley Davidson do better.


Criticism
smoke signal | Wed Nov 12 20:13:55 2014
Can't face reality guys? The uncouth immigration officials at Mumbai airport should be sent on a PR course!


Deley in FTB announcement.
Krishnamurarie Shah | Wed Nov 12 14:33:05 2014
I appreciate your thinking. Your suggestion is fair and acceptable for the growth and development of Indian industry.


FTP
Raajesh Kumar | Wed Nov 12 10:13:20 2014
What we feel Modi Govt. want to change old laws retarding the progress, they have a vision but trying to amend so many laws in short time is a bottle neck. As you said old laws will prevail till new amendments is quite obvious.


FTP
Ramjee Mishra | Wed Nov 12 06:47:54 2014
It is very essential to take a decision on Foreign Trade Policy specially on export for industrial export promotion. It is matter of National Interest.


FTP
Harish R Shah | Wed Nov 12 06:21:35 2014
Service sector, Manufacture or commodity, government must ensure the sector that exchange rate of rupee v/s dollar will remain more or less to boost exports. Export earning is the backbone of Indian economy and industry, trade or service providers should be very optimistic about next two to three years that stability of exchange rate. Must focus and gain more and ore business rather waiting and get disappointed whether govt declare or no FTP.


GST
Anoop Kumar B S | Wed Nov 12 04:29:23 2014
One Time tax is the best.


India: The way it is
Alibaba | Wed Nov 12 03:45:56 2014
If Indian business and government were less corrupt then the country might stand a chance.But no, it is in the genes not to be straightforward. Stop kidding yourselves and get on the same page as the rest of the world, it's 2015 soon! Indians' span of concentration is too short, always approaching a business deal as if it is the last one! Don't ever compare yourselves with China, they have achieved apparent success but really produce a lot of junk.Get your quality right first and stop thinking money and discounts like traders in a souq!Gandhi was right "until we learn where to spit and throw our rubbish, we will never be a part of the rest of the world". Don't become a failed state like your neighbour!


 
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