Online platform soon for amnesty scheme benefits: DGFT SK Sarangi

Over the next one week, the government will create an online platform for entities to avail special one-time amnesty scheme for default in export obligations, Director General of Foreign Trade Santosh Kumar Sarangi said during an interaction. Edited excerpts:

What will be the immediate benefits for exporters under the Foreign Trade Policy (FTP) 2023?

There is no correlation between providing incentives and higher exports. Over a period of time, the thought process has been to move away to remission-based schemes and improve the supply chain on our domestic front. For that, focusing on schemes such as the production-linked incentive (PLI) scheme. PLI has huge outlay, running into thousands of crores (of rupees) for different sectors. Once you start implementing those, you will see direct results in exports. For instance, PLI in electronics has also helped in import substitution, facilitating exports.

How will the government implement the special one-time amnesty scheme? Is there any threshold value for these cases?

We will create an online platform by the first week of April for people who intend to avail of this. Once they register themselves on the portal, they get six months to do this. These cases are mostly from 2009-2014.

There is no threshold as such. But for a person who had taken a benefit with a duty saving for Rs 10 crore, then today, along with interest, the liability will be more than Rs 30 crore. Here, the interest will be calculated on Rs 10 crore, but will be capped at 100 per cent of the duty saved, it will be Rs 10 crore. The additional attraction is the interest on additional special duty and additional customs duty that was levied over and above basic customs duty, interest will not be charged on that. Effectively, it will be less than 100 per cent.

What sectors will benefit from merchanting trade reform?

There are a lot of merchants based in Singapore, Hong Kong, and Dubai, whose only job is merchanting trade and they facilitate buying and selling between third countries.

Since we did not have the facilitation within FTP, for many items that are prohibited (for export), banks were not honouring merchanting trading arrangements. For example, suppose we banned wheat today, if a trader or an intermediary wanted to supply wheat from Ukraine to Africa, our bankers will not honour since FTP did not have a provision for this (even if the wheat did not touch Indian shores).

There were issues with merchanting trade arrangements that needed explicit provision in the FTP. It will allow our intermediaries to do second and third country transactions, without any restrictions.

What is the road map for the ‘Districts as Export Hubs’ (DEH) scheme? What is the budgetary allocation?

Many exporters come to us, saying they were facing difficulties at the district level such as electricity connections are not stable. So we thought that it would be better to prepare a district team-led export action plan. We have tried this by preparing a state-level export action, prepared by CII, FICCI and other agencies. But it will be better to prepare a bottom-up plan, using a district team. Second, to create an institutional mechanism, which will be able to address issues faced by exporters.

To begin with, we will focus on 75-100 districts — where we will get the regional authorities of DGFT to work with the district team, and preparing district export action will be the focus.

In the first year, the spending requirement will not be high. We will spend on creating awareness, sensitisation, workshops at the district level. DEH will cover goods and services (exports). 

Petroleum exports have gained because of the situation in Russia. If the situation doesn’t get better in Russia, can India become a permanent petroleum exporter?

I don’t see that happening on a permanent basis. The margins are not very high in petroleum refining.

This year, India gained because of the ban and price-capping on Russian oil by European countries. Expecting this kind of growth on a YoY basis will not be desirable.

There are other sectors, such as engineering goods, agriculture, food processing, where the potential is very high. Those are the sectors we need to focus on.