 "Focused export schemes may not be widened")
Officials said the commerce and finance ministries didn’t favour additions to the focused market scheme (FMS) and the focus product scheme (FPS), as this would have revenue implications.
Besides, the government fears such export promotion would not be WTO-compliant. “Most items are already covered in these schemes. If you keep expanding the list by adding small items, it will lose relevance. If we include everything, it isn’t focused. We are looking at alternatives to boost exports,” said an official, on condition of anonymity.
Exports of a particular product or to a particular market get relief under these schemes. While FMS covers 83 countries, 29 come under the new focus market scheme and 41 under the special focus market scheme. FPS covers 548 items, while an additional 144 are covered by the market-linked focus product scheme.
But officials said this year, the government was planning to restructure the FTP, not focus only on incentives. The focus of the new policy will be consolidating markets, products, services and standards. “FMS and FPS are outright reward schemes. The revenue loss is rising because of the sops given in these schemes. So, non-tariff measures could be considered to boost exports,” said a finance ministry official.
Though the FTP will be unveiled by the government that comes to power after the ongoing elections, the bureaucratic machinery has already started preparing for it by considering industry representations. A brief on the matter is being prepared for the next government.
The commerce & industry ministry is planning to roll out the FTP after the 2014-15 Budget is presented (likely in the beginning of July). As the current FTP will expire by July, the new one might be rolled out by August.
“Instead of giving a plethora of incentives under FMS, FPS and other schemes, the focus will be on analysing fiscal instruments. This means we will try to enhance those incentives which are already in place and how to better utilize those rather than offering sops to more products,” said a senior official in the commerce department involved in framing the policy
Some, however, feel reward schemes such as FMS and FPS, which offer duty credit scrips, are the best way to promote exports.
“The countries with which we have foreign trade agreements, bilateral investment promotion & protection agreements and comprehensive economic partnership agreements should also be brought under FMS. This will give the double advantage of low tax in those countries, as well as the benefits of FMS. The commerce ministry will evaluate the performance of products under FPS. We can see a few products for which we have developed strength moving out, and others coming in,” said Ajay Sahai, chief executive and director-general of the Federation of Indian Export Organisations.
In March, India’s exports fell 3.15% to $29.58 billion. For 2013-14, exports stood at $312.35 billion, against $300.4 billion in 2012-13, growth of four%. The government had set an export target of $325 billion for 2013-14.