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The Federation of Indian Export Organisations (FIEO) has urged Prime Minister Narendra Modi to review the new Foreign Trade Policy (FTP), as exports might contract again this financial year.
The FTP, released on April 1, has consolidated all incentive schemes under the Merchandise Export From India Scheme (MEIS). The rates of incentives were reduced to 2-5 per cent from 2-7 per cent.
“We have written to the PM and the commerce department,” said S C Ralhan, president of FIEO, during a press conference here on Wednesday. “We would like to apprise him of the situation. Exporters need oxygen to live. The way things are moving, it will be a miracle if we reach even $310 billion this financial year.”
Ralhan said this was because the order bookings were 40-50 per cent lower this year against last year. He added with exports dwindling and the rupee gradually strengthening, a massive job loss in the export-oriented sectors was expected.
“Earlier, the order bookings for some of the traditional sectors such as engineering, textile and agricultural products used to be done four-five months in advance. Now we cannot even book an order a month in advance, due to instability in policy,” he said.
He said FIEO would ask the government to restore the MEIS benefit under the earlier rate for at least two years. “While we appreciate the move to take exporters gradually away from subsidy, the timing of the move probably is not correct. The MEIS benefit should be restored at the same level as earlier at least for 2015-2016,” he said.
In 2014-2015, total shipments from India contracted 1.23 per cent to $310.5 billion against $314.4 billion in the previous year.
FIEO demanded that 70 more sectors be added under MEIS with revised rates for rewards. It asked the government to classify the countries according to the incentives announced.
According to Ralhan, although containerised exports at major ports in each quarter of 2014-2015 was growing over 2013-2014, the gap had narrowed. “This clearly shows that volume of exports is also under threat now. This is very worrying and we need to reverse this trend.”
He urged the government to immediately re-introduce the three per cent interest subvention on a retrospective basis from April 2014. He said the delay in re-introducing the scheme was causing problem for the micro and small firms.
The contraction in India’s exports in 2014-15 was the third in the past six years. In 2012-13, exports had fallen 1.85 per cent to $300 billion from $306 billion in 2011-12. In 2009-10, exports fell 3.4 per cent year-on-year. Shipments contracted a steep 21.06 per cent in March, the most in 67 months.
