Policy analysis: Transport and Market Assistance Scheme

Reading time: 8-10 minutes.

The Commerce Ministry through the Directorate General of Foreign Trade (DGFT) has announced relaxations in the procedure for Transport and Market Assistance (TMA) Scheme for agricultural exports. “Provisions for the submission of a physical copy of the application with the concerned regional authority have been relaxed,” said the DGFT in a public notice. It was stated that the physical copy with the prescribed documents can be filed manually by October 30 of this year.

This step of government came in response to the requests made by exporters. They had expressed their inability to follow the procedure amid the COVID-19 outbreak. The subsequent lockdown has also prevented them from submitting the applications manually as required. It was a “genuine problem” and thus, the Central Government responded. The Center not only gave relaxations but is also open to giving further extensions if the condition prevails.

The TMA scheme for specified agriculture products was introduced on 1st March 2019, to assist with the “international component of freight and marketing of agricultural produce”. It aimed to cut down the transportation costs of exports as well as to promote brand recognition for Indian agricultural products in the specified overseas markets.

Significance of this development

TMA was introduced last year in April 2019 to boost agricultural exports. It aims to provide financial assistance for transportation and marketing of agricultural products to boost exports of such commodities to regions including Europe and North America among others. Through this plan, the government reimburses a certain part of freight and marketing charges. The assistance is provided with cash via Direct Benefit Transfer (DBT).

The other aim of this scheme is to promote brand recognition for Indian farm products in key markets. It mitigates the disadvantage of higher costs of transportation of export and aids in increasing farm exports.

This scheme has been an essential step towards providing much-needed relief to Agri exports. It provides for proper financial incentives, market support, and lowers the cost of doing business. The recent decision of the government to give relaxations in the procedure for availing the scheme is a welcome step. It agrees with the present terrifying times.

The outbreak of COVID-19 has brought the world and its economy to its knees. The Indian economy has been suffering as well. A lockdown has been put in place as a counter-measure across the globe. In such a situation, complying with the deadlines proves to be difficult.  With the shift in the world’s reality, incentives and relaxations have been one of the few measures that the governments can provide.

The Union Government heeded to the requests of the exporters. Many relaxations and extensions have been given in the Foreign Trade Policy. The policy of 2015-2020 has been extended for another year. The exporters now don’t have to worry about submitting their applications manually. They can do so till October 30 of this year. This relaxation applies to the applications filed electronically between 1 February 2020 and 30 September 2020.

These are unprecedented times and any incentives and relaxations by the government can go a long way in helping the citizens as well as the nation’s economy.

Salient features of the scheme

Following are some of the major features of the TMA scheme:

  1. Applicability:

It applies to exports for a period that is specified by the government from time to time. It was initially said to available for exports affected from 1 March 2019 to 31 March 2020. But it has been extended to another year owing to the pandemic.

  • Coverage:

All exporters of eligible agricultural products who are duly registered with the relevant Export Promotion Council according to the FTP are covered under this scheme.

  • Products eligible:

The assistance is provided on the export of all agricultural products that are covered in the HSN chapter 1 to 24. Most farm items are covered under this scheme except a few whose list has been provided within the annexure.

  • Assistance:
  • Assistance under TMA is provided in cash through DBT as reimbursement of freight paid. It does not apply where no freight is paid.
  • The level of assistance varies according to different regions and is notified from time to time.
  • It is admissible only in the case where payments for the exports are in the form of Free Foreign Exchange.
  • The scheme covers freight and marketing costs of export by air as well as the sea.
  • Procedure for availing assistance under the scheme:
  • The reimbursements are made according to the procedures laid down under Chapter 7(A) of the Handbook of Procedures (2015-2020).
  • It is made through the Regional Authorities of DGFT which also lays down the procedure for scrutiny of the claims, the audit of the payments made, recovery of the ineligible/excess paid assistance, and interest on such recoveries.
  • Procedure for claiming TMA:
  • An application can be filed by a registered eligible exporter having a valid RCMC from a competent authority.
  • It is to be filled online on the DGFT website. A physical copy is to be submitted to the concerned Regional Authority.
  • The application fee is Rs. 1000.
  • The application should be made quarterly. All claims made in a quarter must be submitted collectively as a single application along with chartered accountant or cost accountant or company secretary certificate.
  • The claim should be made within one year.
  • Eligible regions and countries include West Africa, EU, Gulf, North America, ASEAN, Russia and CIS, China, and South America among others.
  • Excluded products include live animals, meat, whey, butter, cheese, curd, milk, cream, wheat, onion, and rice among others.

Legal basis

The TMA scheme is included within the Foreign Trade Policy of 2015-2020. It empowers the DGFT to notify the procedure which is to be followed by the exporters, importers, as well as the concerned authorities for the implementation of the FTP. Further, section 5 of the Foreign Trade (Development and Regulation) Act, 1992 has empowered the Central Government to formulate and announce an FTP from time to time. It was using these powers that the government has extended the FTP 2015-2020 for another year.

Critical analysis

The government has a long-standing interest in the efficiency of the transportation system as well as the cost of shipping farm products to the market. Today the concerns are growing over serious transportation problems. In our modern agricultural structure, transportation bridges the gap between the producers of agricultural commodities and the market in which these products are sold. It also bridges the gap between the producers and the sources of farm supplies.

Transportation inevitably involves the expenditure of time and effort. The need of the hour is a robust transportation system that functions with a minimum amount of time and cost. One of the focal points of concern is the ability to reach markets.

Trends in freight rates and the freight rate relationships have raised the concerns of farmers and exporters alike during the last decade. Indian farmers face a loss of about Rs. 92,651 corers per year. The primary causes of which are poor storage and transportation facilities. Markets are the primary medium for farmers to exchange their produce for money. Lack of connectivity to ensure that their harvest reaches the desired markets in time leads to the lowering of farmers’ ability to monetize their produce. This becomes even more critical in the case of perishable fruits and vegetables.

As compared to the other major agricultural exposing countries, India’s transportation and marketing costs are relatively high. Exporters have to face further struggles with transportation across nations. The TMA scheme by the Indian government provides financial assistance for the transport and marketing of agriculture produce. It thereby boosts the export of agricultural commodities in specified target markets. In the long run, the establishment of a robust multimodal transportation system to connect India’s hinterlands will go a long way in making agri-exports competitive.

Agriculture products are essential components in domestic as well as international markets. Cost competitiveness becomes necessary in the international market. The high costs of transportation directly impact agricultural exports. TMA thus helps mitigate the hindrance presented by higher costs of transportations for exports of identified agricultural products by providing reimbursement. This incentive will help improve India’s Agri exports scenario.

Conclusion

The Transport and Market assistance scheme (TMA) will surely have a positive impact on the Indian farm produce. It will help make goods more competitive in foreign markets, reduce transportation cost of agricultural products, stimulate Indian farm exports, help meet India’s Agri export potential, enable farmers to get the best possible returns, enable brand recognition of Indian products in the world markets and ensure the expansion of the Agri export.

The government’s move is appreciative in this regard. Moreover, the recent relations and the openness for their continuation in the future have come as a big relief to the exporters amid the terrifying outbreak.

Author: Prajakta Panda from University law college, Bhubaneswar.

Editor: Shalu Bhati  from Campus Law Centre, Faculty of Law, University of Delhi.

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