Finance ministry tighten grip over 3 exports schemes

NEW DELHI: The finance ministry is set to get greater control over at least three schemes to promote exports under another measure to improve the ease of doing business and hassle-free trade. The three measures are advanced authorisation scheme, export promotion capital goods scheme and deemed exports schemes, accounting for almost Rs 35,000 crore in government incentives. While the commerce ministry will keep the policy-making powers for the schemes, it has proposed that their implementation be shifted to revenue department of the finance ministry.

Under the current system, traders approach the Directorate General of Foreign Trade (DGFT) for licences for the schemes and also have to register with the customs department, leading to duplication of effort and hassles. “The idea is that policy-making will remain with us and implementation be done by MoF. Discussions are on to split roles for advanced authorisation scheme, EPCG scheme and deemed exports,” said a commerce ministry official. A similar mechanism has already worked for the duty drawback scheme, under which exporters are compensated for customs and excise duties paid on inputs used to manufacture products meant for sales overseas.

While the Foreign Trade Policy sets the guidelines for the payments, the revenue department fixes the rates and refunds the exporters. Under the advance authorisation scheme, exporters can import raw material and inputs without paying duty after getting a licence from the DGFT.

Similarly, in the export promotion capital goods, or EPCG, scheme, exporters get full exemption from paying duty when importing machinery to manufacture goods meant for exports. Here, too, DGFT is the licensing authority. “Depending on how this takes shape, this can be extended to the merchandise and service exports from India schemes,” the official added.

The industry has called it a logical move as customs and excise officials are aware of manufacturing units even in far-flung areas and hence are better equipped to issue licenses. “This is a move towards simplification but revenue authorities will have to be more proactive and sensitive to trade,” said Ajay Sahai, director general of FIEO.

ET View: Cut Red Tape
When it comes to exports and trade, rationalising administrative processes make perfect sense. We do need to slash red tape, to make our declining exports more competitive. In tandem, there’s the pressing need to shore up productivity, reduce delays and improve logistics in merchandise trade. Going forward, we need to speedily remove infrastructural bottlenecks that seem to make our exports uncompetitive. In parallel, there’s also the need for focused policy attention on services exports.