Faced with a continued run of inflation, the government on Friday put a ban on cement exports, withdrew export incentives on primary steel and extended the sunset clause for tax incentives to export oriented units by one year to March 31, 2010.
Unveiling the annual review of the Foreign Trade Policy, Commerce and Industry Minister Kamal Nath also set an ambitious export target of $200 billion for the current financial year, up nearly 30 per cent from last year.
“To curb inflation, the government has banned export of non-basmati rice, edible oil and pulses... We are also withdrawing incentives under promotional scheme on export of cement and primary steel items,” Nath said.
He exhorted exporters to strive to achieve this year's target, which will help the country stay the course to increase its share of global trade to 5 per cent by 2020. “The task is difficult, but the prize is great. It will call for annual growth of 25 per cent. If you achieve it, India will become a trading super power it was 200 years ago,” he said.
India's exports totaled $155 billion in the fiscal year ended March, slightly short fo the government's target of $160 billion.
Unmindful of the criticism faced in recent months over special economic zones (SEZ), the minister said the exports from SEZs are expected to touch Rs 1,25,000 crore during 2008-09, an increase of more than 86 per cent over the last fiscal. “The government sees SEZs as vehicles of industrialisation and employment generation,” Nath stated.
Pointing out the massive increase in exports and employment, the minister said, “Development of this nature reassures us of the validity of the basic policy relating to SEZs, notwithstanding the skepticism expressed by a few persons.”
The government has reduced customs duty on import of capital goods from 5 per cent to three per cent under the Export Promotion Capital Goods (EPCG) scheme.
Nath said interest subvention to help rupee-hit exporters would be extended by one more year, while the average export obligation under the EPCG scheme will reduced.
The information technology (IT) sector would be brought under the special focus initiative this year with focus on manufacturing and export capabilities in the IT hardware sector. Nath said specific items of this sector shall be made eligible under the High Tech Product Export Promotion Scheme. “Funds would also be specifically earmarked for this sector under ongoing Schemes”, he added.
India Inc welcomed the proposals and stated the initiatives will give a push to exports of manufactured goods as well as to agricultural and labour-intensive exports.
The government also proposed certain additional measures such as bringing of advance authorisation scheme and Export Promotion Capital Goods (EPCG) Scheme under the electronic data interchange from July 1 this year, treating of all EDI ports as a single port. The minister also announced the setting up of a joint task force (JTF) to address structural problems. The task force will have representatives of the central and state governments, local bodies, industry and exporters to evolve a detailed action plan for boosting exports.