Govt's new foreign trade policy set to boost domestic manufacturing

The Export Promotion Capital Goods (EPCG) scheme, which allows for the import of capital goods at zero Customs duty for export production, is being further rationalised under the new foreign trade policy, and is expected to boost domestic manufacturing.

For instance, the Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme has been added as an additional scheme eligible for benefits under the common service provider scheme of EPCG.

The dairy sector is set to get a boost as it will be exempted from maintaining the average export obligation. Battery electric vehicles of all types, wastewater treatment and recycling, rainwater harvesting system, green hydrogen, among others, have been added to green technology products and will be eligible for reduced export obligation requirement under the EPCG scheme.

An inter-ministerial committee will be set up to examine trade-related grievances micro, small and medium enterprises (MSMEs). This will expedite decision-making with a ‘whole government approach’, according to the policy.

Four new towns – Faridabad, Mirzapur, Moradabad, and Varanasi–have been designated as ‘Towns of Export Excellence’ in addition to the existing 39 towns. This is expected to boost the exports of handlooms, handicrafts, and carpets.

“These towns will have priority access to export promotion funds under the market access initiative (MAI) scheme and will be able to avail common service provider (CSP) benefits for export fulfillment under the EPCG scheme,” an official statement said.

An inter-ministerial committee, comprising officials from department of revenue, department of posts, Directorate General of Foreign Trade will lay down a road map to facilitate and boost e-commerce exports, which is one of the key areas of the new foreign trade policy.

Apart from that, under the policy, e-commerce as export hubs (ECEH) will be set up through private initiative or in public-private partnership (PPP) mode, in partnership with the states or the Centre.

“ECEH will function to achieve agglomeration benefits for e-commerce exporters. The ECEH may provide for storage (including cold storage facilities), packaging, labelling, certification and testing and other common facilities for the purposes of export. The ECEH shall also provide for dedicated logistics infrastructure for connecting to and leveraging the services of the nearest logistics hub(s),” according to the foreign trade policy document.

“E-commerce exports require paradigms tailored to leverage the huge opportunity that lies ahead of India. The development of a conducive regulatory ecosystem that is supportive of the digital economy and technology-driven exports is a positive move in the right direction. The incorporation of a dedicated e-commerce chapter in the new FTP will provide MSMEs with the ability to compete globally and work towards the goal of a $5 trillion economy,” Aruna Sharma, retired IAS officer said.