Status recognition term increases for Indian exporters

Sheela Mamidenna

The recent amendment to the Foreign Trade Policy (FTP) by the office of the DGFT regarding eligibility for ‘status holder recognition’ could have various implications. According to FTP, Chapter 3, of 3.20, 2015-20, all Indian exporters of goods, technology and services with an IEC number shall be eligible for status holder recognition, upon successful performance of the current and previous two financial years.

However, the recent amendment from the DGFT office reads, “An applicant shall be categorized as status holder on achieving export performance during the current and previous three financial…, as usual, the performance of the export will be counted on the basis of FOB, of export earnings in free foreign exchange.” But, for gems & jewellery sector, the tenure will remain the same, which means, performance will still be measured on the basis of the current and previous two financial years.

This could be a move by the government to encourage judicious performers, exporters who have been committed to the industry for long. It also suggests that this could be a process to weed out players who are not serious; rather, the fly-by-night operators who upon achieving the desired Star Status category may shut shop.

While gems & jewellery sector enjoys the special privilege, this may be an indication to other export houses who have enjoyed Star Status within a short period, to tighten up their acts and achieve their statuses by proving themselves for an additional year. Does it mean not every exporter cannot be a star performer—we will have to mull over it!

The wind may blow in either direction, but this may not be good news for exporters as exports have been declining for the last 16 months. With that said, large-scale exporters may find a way to anchor on safer shores, however, for new startups and small-scale exporters, this isn’t a policy they were anticipating. It must be remembered that it isn’t easy to consistently perform well for four years, when the world’s economy is wobbly. An optimist will sure dig through the tunnel to find an easier way out, but for the rest, let the sail stand against the wind.

Speaking of the sector in the safe zone, i.e gems and jewellery it has significantly contributed around 6-7% to the country’s GDP in the recent years. Keeping its value in mind, the government has declared the gems & jewellery sector as a ‘focus area’ for promoting exports, because this segment has exhibited high export potential and is labour intensive. Also, relaxation has been unmistakably granted to this sector because India is deemed to be the Queen of global jewellery market—the reason being, its low cost and high skilled labour have a huge impact globally.

We look forward to seeing gems & jewellery sector branding Indian jewelleries internationally on a larger scale. And meanwhile, all we can hope that this new alteration does not discourage exporters, but rather motivate them to get the recognition that is much desired and help stem the decline in India’s exports.