Covid impact: Govt extends current foreign trade policy till September 30

Exemption from payment of IGST and compensation cess on the imports made under advance authorisations and by export oriented units has also been extended

The union commerce ministry on Wednesday announced the extension of the existing foreign trade policy by another six months to support exporters dealing with Covid-19 related uncertainties. The policy was scheduled to lapse on March 31.

Last year, the government had extended the foreign trade policy 2015-20 till 31 March, 2021, to help exporters tide over the outbreak of covid-19. Through the extension, it had then continued to offer existing incentives under various export promotion schemes.

In the past, the government had said that the new policy will come into effect from April 1, 2021 for a period of five years. It had also conducted meetings with relevant stakeholders.

“In view of the unprecedented situation arising out of the pandemic novel covid-19, which is persisting, the government has decided to continue benefits under various export promotion schemes by extending existing Foreign Trade Policy by another six months i.e. up to 30th September, 2021 which will provide continuity in the policy regime,” an official statement said.

Business Standard had reported the development on Wednesday.

Exemption from payment of integrated goods and services tax (IGST) and compensation cess on the imports made under advance authorisations and by export oriented units (EOUs) has also been extended up to 30 September. “Similarly, the validity period of the Status Holder Certificates is also extended. This will enable the Status Holders to continue to avail the specified facilities/benefits,”an official statement said.

A delay in spelling out a fresh five-year roadmap on international trade will give policymakers more time to take decisions on crucial policy issues. It will also give exporters more time to prepare themselves amid continued covid-19 related uncertainty.

“It's now clear that the industry will have to wait further for a period of 6 months for the new policy. Having said this, the government can consider providing clarity on key areas under FTP which the industry is eagerly waiting for including rates under RODTEP (remission of duties and taxes on export products), continuation of SEIS (Service Exports from India Scheme) and rates thereof, etc,” Abhishek Jain, Partner, EY said.

According to official data, during the first 11 months of the current fiscal, merchandise exports contracted 12% on-year at $256.18 billion. Similarly, imports also declined (-) 23.11% to $ 340.80 billion. As a result, a trade deficit stood at $84.6 billion during April-February.