When Commerce and Industry Minister Anand Sharma announces amendments to the Foreign Trade Policy (FTP) 2009-14 on August 23, he is likely to provide additional incentives to sectors such as textiles, leather, handicrafts and carpets — the segments that have not grown fast and served the government’s aam aadmi agenda.
While the broad measures of the policy will remain the same, the main focus of the amendment will be to assist the sectors that employ large number of people. Hence, the measures that will be announced in the review of FTP will pertain to mainly textiles, carpets, leather and handicrafts, which are labour-intensive sectors and require skilled manpower.
Tradionally, FTP, which was earlier called the Exim Policy, was announced on March 31. However, during his five years in Udyog Bhawan, former commerce minster, Kamal Nath missed the date every year. This year, Sharma also missed the opportunity to announce the policy in March, before the start of the new financial year.
Apart from the focus sectors, the government was expected to add more markets like Russia, Ukraine, Turkey, Nigeria and Vietnam under the Focus Market Scheme (FMS), while giving a thrust to product diversification through the Focus Product Scheme (FPS). In addition, some sectors were likely to get facilities like extension of zero-duty benefits under the Export Promotion Capital Goods (EPCG) scheme beyond the March 2011 deadline. The move was aimed at facilitiating technological upgrade, officials in the Commerce Department said.
Sharma’s review of FTP could also seek to extend the Duty Entitlement Passbook (DEPB) Scheme — an export incentive given by way of grant of duty credit against the export product, to promote diversification in exports — by six months beyond the December-31 expiry date. During 2009-10 the estimated revenue lost on account of various export promotion schemes, including special economic zones was estimate to be at '43,622 crore, compared to '49,053 crores in 2008-09.
“There are still some sectors that require assistance from the government to be able to become stable, like other products. Demand for items such as carpets, leather goods and silk is still sluggish. However, to assist these sectors, the government should not withdraw the previous stimulus measures, which are important for exports to achieve the desired target of $200 billion this year,” said A Sakthivel, president of the Federation of Indian Export Organisations (FIEO) and Tirupur Exporters Association.
Exports and imports have been rising steadily since November 2009 after falling for 13 straight months.