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India: Confusion continues over continuance of current FTP policy

Exporters are in dark over whether the government will go ahead with the scheduled announcement of the new Foreign Trade Policy (FTP) 2020-25 on April 1. Many feel that FTP shall be postponed due to the uncertainties unleashed by the Covid-19 pandemic and a shut-down of government offices.

The Commerce & Industry Ministry, however, has not yet made any official announcement on whether the new FTP will be unveiled on April 1 or delayed.

The Apparel Export Promotion Council has sought a special package for the apparel sector, including creation of a corpus fund for exporters, as it expects uncertainty to linger for at least next two months impacting shipments worth $1 billion that would affect 13 million direct workers and their families.

“There is no point in announcing a new FTP policy on April 1 if there is not much to be announced in terms of schemes and measures,” pointed out Ajay Sahai, Director-General, Federation of Indian Export Organisations (FIEO).

Earlier government had said that the popular Merchandise Export from India Scheme (MEIS) for exporters will be replaced with the new Remission of Duties and Taxes on Exported Products (RoDTEP) scheme in phases after sectoral discussions over the next few months, there was no need to announce a new FTP in a hurry.

Under the MEIS scheme, exporters are assured of a minimum incentive for their exports while there is no guarantee what the new RoDTEP scheme will have to offer as it still needs to be deliberated upon.

It is felt that it woul be better for the government to wait and have proper deliberations with the industry on special packages before finalising the FTP for the next five years.

India’s goods exports during April-February 2019-20 dipped 1.5 per cent to $292.91 billion compared to the same period last year, although exports increased 2.91 per cent to $27.65 billion in February 2020, for the first time in seven months.