Review mechanism needed in FTAs for course correction: Indian panel

The growing preference of firms located in major European countries and the United States to shift from China to other manufacturing bases offers a window of opportunity for India's trade sector, which needs to be capitalised, it said.

The committee has stressed the need for a policy measure to benefit from the strategy that should incorporate steps to ensure a business-friendly environment and modern manufacturing infrastructure for the incoming investments.

The government should endeavour to pursue FTAs or preferential trade pacts with nations that seek to invest in India under the strategy, the report was quoted as saying by a news agency.

It said FTAs should be concluded expeditiously to reap trade benefits. The panel also called for the release of the forthcoming foreign trade policy (FTP) within the stipulated timeframe.

On India's exports, it said that decline in the outbound shipments in any sector should be dealt with a firm hand.

"The committee recommends that the department (of commerce) should identify the infirmities and opt for a more focused approach in increasing market access of the sectors that exhibit a downtrend in exports," it added.

On special economic zones (SEZs), the report said that imposition of minimum alternate tax and the introduction of sunset clause would adversely affect the competitive advantages of SEZ units.

"The committee recommends that the government should ensure the continuation of fiscal benefits and extension of a sunset clause to retain the competence of SEZ units," the report said, adding SEZs can be included under the ambit of Remissions of Duties and Taxes on Exported Products (RoDTEP) scheme.

It has expressed concerns over trimming export incentives like under the MEIS (merchandise export from India scheme). The panel suggested "the extension of benefits of RoDTEP scheme to the sectors of pharma, organic and inorganic chemicals and iron and steel in order to retain their price competitiveness in global markets".

ALCHEMPro News Desk (DS)