Union Commerce and Industry Minister Anand Sharma on Tuesday indicated that his Ministry could carry out a thorough review of the impact of the Foreign Trade Policy (FTP) on trade and performance of different sectors in December.
“We will have another sectoral review in December,” Mr. Sharma said at two different seminars organised by business chambers Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industry (CII) on the FTP.
In November last, the Ministry had extended market and product-specific incentives to over 2,000 items, while in the April review exercise this year, it factored in the annual supplement to the FTP on Monday.
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Mr. Sharma also cautioned exporters of the continuing uncertainty in the global economy warning there would be bumpy rides. After posting a robust growth of over 32 per cent in the first quarter of 2010-11, India's exports slumped to 13 per cent in July due to sluggish demand in its traditional markets of the U.S. and EU.
Speaking at the CII seminar, Minister of State for Commerce and Industry Jyotiraditya Scindia said exports growth was dependent on three pillars. These were good infrastructure, low transaction costs and full refund of all indirect taxes on inputs paid by exporters.
Mr. Scindia stressed on the work that had been done by the task force on transaction costs to address exporter concerns related to the high cost of moving goods from factory to port. The Minister pointed out that a large number of recommendations of this task force have already been implemented in the supplement to the Foreign Trade Policy (2009-14). “Work still needs to be done in partnership with some of the other key stakeholder Ministries such as Railways and Shipping to ensure the implementation of the remaining issues highlighted by the task force,” he said.
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In his remarks, Sunil Mitra, Secretary, Department of Revenue, agreed with Mr. Scindia's comments and said that ensuring indirect taxes on inputs were refunded to exporters was important for export competitiveness. He said the current tax regime often put the exporters at a disadvantage and also does not provide a level-playing field to domestic manufacturers vis-a-vis import competition.
Commenting on plethora of taxes and the variation in State-level VAT, Mr. Mitra said implementing the GST was the key to ensuring competitiveness of India's manufacturing sector and export growth.