The New Foreign Trade Policy 2015-20 has made many new measures for the promotion of India’s foreign trade. First is that the government simplified numerous existing export promotion measures into two new basic schemes. These schemes are “Merchandise Exports from India Scheme (MEIS)” and “Services Exports from India Scheme (SEIS)”. The ‘Services Exports from India Scheme’ (SEIS) is for increasing exports of notified services. These schemes (MEIS and SEIS) replace multiple schemes earlier in place, each with different conditions for eligibility and usage. Another notable feature is that the various incentives (MEIS & SEIS) are available for SEZs also.
New sector like ecommerce is also eligible for MEIS export benefits like the conventional sector including handicrafts, handlooms, books etc.,
An overall simplification of the export promotion regime was made by realigning the different focus product schemes and focus market schemes into two schemes. Earlier there were 5 different schemes which are now merged into one. Besides, there would be no conditionality attached to the scrips issued under the scheme.
The policy for the first time makes a combined export target for goods and services of $900 billion by 2020.
(i) EXIM Policy for goods: Merchandise Export from India Scheme (MEIS)
The MEIS is the newly introduced export incentive scheme for goods. Previously, there were several schemes like focus product scheme and focus market schemes. Now, the MEIS has replaced the five existing schemes of earlier Foreign Trade Policies. (the replaced schemes are: Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, and VKGUY).
Export incentives of notified goods to notified markets under ‘Merchandise Exports from India Scheme (MEIS) will be paid in terms of duty credit scrip. The exporter need not pay import duty amount expressed in the scrip. This import duty amount will be given as a percentage of the export value made by the exporter.
The MEIS envisages higher support for Agricultural and village industry products. These products are to be supported across the globe at rates of 3% and 5%. Processed and packaged agricultural and food items under MEIS will get higher benefits. There will be higher levels of support for selected category of products including:
- Agricultural and Village industry products, presently covered under VKGUY
- Value added and packaged products.
- Eco-friendly and green products
- Labour intensive Products.
- Industrial Products from potential winning sectors.
- Hi-tech products with high export earning potential
Other important measures
Industrial products to be supported in major markets at rates ranging from 2% to 3%. Defence and technology oriented products were given incentives under the MEIS Scheme.
Classification of countries for focus market scheme
The focus market scheme has been restructured under the new FTP 2015. Different categories will be given incentives based upon the importance of the export market.
Category A: Traditional Markets (30) – European Union (28), USA, Canada.
Category B: Emerging & Focus Markets (139), Africa (55), Latin America and Mexico (45), CIS countries (12), Turkey and West Asian countries (13), ASEAN countries (10), Japan, South Korea, China, Taiwan,
Category C: Other Markets (70).
(ii) Service Export Promotion Scheme: Service Exports from India Scheme (SEIS)
Served From India Scheme (SFIS) has been replaced with Service Exports from India Scheme (SEIS). SEIS shall apply to ‘Service Providers located in India’ instead of ‘Indian Service Providers’. Thus SEIS provides for rewards to all Service providers of notified services, who are providing services from India, regardless of the constitution or profile of the service provider.
The rate of reward under SEIS would be based on net foreign exchange earned. The present rates of reward are 3% and 5%. The list of services and the rates of rewards would be reviewed later.
Incentives (MEIS & SEIS) to be available for SEZs
A major feature of the FTP 2015 is that it extends the merchandize and service Incentives (MEIS & SEIS) to be available for units located in SEZs also.
All duty credit scrips issued under MEIS and SEIS would be fully transferable. They can be used for payment of custom duty, excise duty and service tax.
(iii) Encouragement to Status Holders
Status holders are entities/persons who promote substantial export turnover or identified group who help export promotion. To encourage them specific promotional measures are given.
(a) Business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade are proposed to be recognized as Status Holders and given special treatment and privileges.
(b) The nomenclature of Export House, Star Export House, Trading House, Star Trading House, Premier Trading House certificate has been changed to One, Two, Three, Four, Five Star Export House.
(c) The criteria for export performance for recognition of status holder have been changed from Rupees to US dollar earnings.
Structure of star trading houses
Export Performance During current and Previous two years in US $ mn
One Star Export House
Two Star Export House
Three Star Export House
Four Star Export House
Five Star Export House
The policy announced that Calicut Airport and Arakonam ICDS, Tamil Nadu are to be notified as registered ports for import and export. Similarly, Vishakhapatnam and Bhimavarm added as Towns of Export Excellence.
New Foreign Trade Policy integrates Make in India’ and ‘Digital India’ into trade policy. The policy also reduces export obligation under EPCG scheme to 75%.