NEW DELHI – The Indian government has urged businesses to actively leverage free trade agreements (FTAs) and non-subsidy schemes under the Export Promotion Mission to boost export shipments, according to a report by Business-Today.
Commerce and Industry Minister Piyush Goyal met with export promotion councils (EPCs) this week to review progress towards set targets and the medium-term strategy for sectoral exports. The emphasis on FTAs comes amid a flurry of trade deals, with the India-UK Comprehensive Economic and Trade Agreement (CEPA) due for implementation from July 15. The government is concerned that Indian industry, traditionally domestically focused, may not have created adequate capacity in sectors like textiles to take advantage of duty concessions under FTAs.
Government Push for FTA Utilization
The government is keen to ensure significant utilisation of FTA benefits. The India-UK deal and one with the European Union, likely to come into force from the year-end, will see tariffs removed on several labour-intensive sectors such as textiles and footwear. This will help Indian products compete with those from Bangladesh and other countries that already enjoy zero tariffs. However, Indian textiles units, including some of the biggest players, are too fragmented and often lack capacity to meet demand. Most are concentrated on cotton.
Export Promotion Mission: Beyond Interest Subsidy
EPC officials pointed out that domestic units have largely focused on using interest subsidy benefits, ignoring other elements of the Export Promotion Mission because some are too cumbersome or do not factor in industry requirements. The commerce department is working to ensure that allocated funds are fully utilised, including for promotional activities and other facilities.
| Element | Status | Issue |
|---|---|---|
| Interest subsidy | Widely used | Other schemes ignored |
| Promotional activities | Underutilised | Cumbersome procedures |
| Other facilities | Underutilised | Not industry-friendly |
Export Targets and Growth
The government is keen to achieve $1 trillion in goods and services exports this year, compared to $860 billion last year, driven by over 15% growth seen in the first 10 weeks of the fiscal. While part of this growth is aided by higher commodity prices, especially crude oil, the Centre expects FTAs to provide a further boost.
Key Entities:
- Persons: Piyush Goyal
- Organizations: Export Promotion Councils (EPCs), Commerce Department, Centre (Indian government)
- Products: Textiles, footwear
- Events: India-UK CEPA implementation (July 15), India-EU deal (year-end), Export Promotion Mission
- Countries: India, United Kingdom, European Union, Bangladesh
The government's push for FTA utilisation signals a strategic shift towards trade integration, but the onus remains on businesses to build capacity and diversify beyond traditional schemes. For importers and exporters, the upcoming UK and EU deals offer substantial tariff savings, particularly in textiles and footwear, provided supply chains can scale up.
Sources:
