PLI expansion, duty remission on table at trade meeting over FTP

A wider production-linked incentive (PLI) scheme and the duty-remission facility are set to predominate trade bodies’ recommendations at the Board of Trade meeting on the foreign trade policy (FTP), on Wednesday.
 
The five-year policy will be crucial in the post-pandemic era as India focuses on reviving economic activities and positioning itself in reconfiguring global supply chains.
 
Other issues including a regulator for shipping lines, doubling India’s global export share, state-specific export strategies, and rising steel prices will be raised at the meeting, to be chaired by Commerce and Industry Minister Piyush Goyal, as India’s exports face headwinds amid the pandemic.
 
Signing free-trade pacts with the European Union and other key economies to overcome the disadvantages of staying out of the Regional Comprehensive Economic Partnership will also come up in the meeting, which will be held via video-conferencing.

 
The Board of Trade, under the Departme­nt of Commerce, has senior officials of key ministries and representatives of the states and industry and trade promotion bodies.
 
The Ministry of Commerce has sought views from stakeholders on this.
 
Ajay Sahai, director general and chief executive officer, Federation of Indian Export Organisations (FIEO), said attention should be on enhancing India’s share in global exports from 1.6-1.8 per cent to 3 per cent in five years. “The focus must be on aligning India’s exports with world imports. If the PLI scheme becomes successful, it will help in enhancing India’s share in global exports.” He said while there were export strategies in most states, incentivising states would be the key. “States will need to be encouraged to participate in exports and hence must be incentivised,” he added.
 
David Rasquinha, managing director and CEO, EXIM Bank, said the FTP should build on strategies involving foreign direct investment-led exports, such as the PLI scheme.
 
“India must shine out as a harbinger of opportunities to multinationals, especially when companies are thinking of relocating from their operational geographies. The narrative of ‘Make in India for the World’ would appeal to investors on dual grounds -- India as an export hub and one that is endowed with a huge domestic appetite,” he said.
 
He said the FTP might need to build on measures to strengthen the export infrastructure of states. Currently, the share of the states in exports is highly skewed in favour of a few, with the top five contributing more than 60 per cent of what the country sends abroad.
 
Suranjan Gupta, executive director, Engineering Exports Promotion Council (EEPC), said the PLI scheme must be expanded to cover micro, small, and medium enterprises (MSMEs), considering that the government was withdrawing a lot of incentives. He said the government might consider a formal structure by which the trading community, the shipping lines, and the Department of Commerce could get together and discuss problems including container shortages and a sharp rise in container costs.
 
India’s engineering exports were down 14 per cent in the April-October period over last year due to global headwinds amid the second wave of the pandemic.
 
Export bodies will urge the government to announce the Remission of Duties or Taxes on Export Products (RoDTEP) soon because they will have to finalise shipment contracts for January.
 
While most schemes under the existing foreign trade policy, including the Export Promotion Capital Goods scheme, the Duty-Free Imports Scheme, and Export-Oriented Units scheme have been challenged at the WTO, they may continue for some time, even as experts point out that the government must look at alternatives to these.
 
Last year, India lost a case filed by the US at the WTO against domestic export incentives when the Dispute Settlement Panel concluded that these schemes were inconsistent with international trading norms.
 
The government has announced the new RoDTEP for a few sectors to replace the popular Merchandise Export from India Scheme (MEIS), which was found to be against multilateral trade rules. The MEIS will expire on December 31 and the rates under RoDTEP are yet to be announced. “The government must look at coming out with alternatives to these schemes,” said Sahai.
 
Rasquinha said: “The government has announced the RoDTEP scheme. I am sure the FTP would be widening the scope of this while bringing in more industries under the support framework.”