India Gov. may withdraw Service Exports Incentive Scheme

New Delhi: The Centre could withdraw programmes such as the service exports incentive scheme to promote more labour intensive sectors and medium, small and micro enterprises (MSMEs) in the future.

The Service Exports from India Scheme (SEIS) has been criticised for not boosting India's services exports.

Some critics of the scheme point put that only major service providers benefited from it.

Centre had introduced SEIS under the Foreign Trade Policy (FTP) 2015-20, replacing the earlier Served from India Scheme.

The main objective of thge scheme is to make India's service exports globally competitive in terms of prices.

Under it, the providers of notified services are incentivised in the form of 'Duty Credit Scrips' at the rate of 3 or 5 per cent on their net foreign exchange earnings.

Reports on Monday cited Commerce Minister Piyush Goyal suggesting that the scheme be discontinued in its current form as it had not helped to increase exports. He suggested, instead using the subsidy to promote other sectors such as tourism.

Speaking at the "DPIIT-FICCI Partnership Forum on Public Procurement for Make in India", organised by industry chamber Ficci and the DPIIT, Goyal said: "We will have to align ourselves with the world standards. We want imports to be curbed and international quality standards have to be adopted both for domestic industry and imports."

Referring to the US-China trade dispute, Goyal said: "There are sectors in which India has competitive advantage and let us start looking at scale. Commerce ministry and DPIIT should identify these sectors and make it publicly available to see the business opportunities to exploit."

He also urged the industry, especially public sector undertakings (PSUs) and large companies to start paying advance to vendors at the time of delivery of goods which will help the MSME sector.

"DPIIT (Department for Promotion of Industry and Internal Trade) should identify 100 PSUs and 250 private companies to start the process and we will monitor to see how many companies take it forward," Goyal said.

The Commerce Minister also emphasised the need to change and expand the current basket of exports to achieve the $1 trillion target.

"The basket is changing but it is not changing fast enough. Can we collectively look at changing our basket of exports to include more value added products? Import substitution or exports, both are equally importan," he added.

Goyal also said that the government has identified few champion sectors like textiles, fisheries and IT, to expand and become a world leader in exports.

"All of us should get out of the mind set of subsidies. It is decremental to India's long-term growth," he said.