New trade policy sets $160 bn export target
The Govt gives exports a service tax waiver, reports Gaurav Choudhury.business Updated: Apr 20, 2007 03:01 IST
The government on Thursday gave exports a service tax waiver, extended the incentives for special economic zones (SEZs) and sought to shift the terms of trade in favour of agriculture through sops.
The popular duty entitlement passbook (DEPB) scheme has been extended till March 2008 and a new scheme, compliant with India’s multilateral trading commitments, will be formulated to replace it.
The merchandise export target for 2007-08 has been set at $160 billion and at $200 billion for 2008-09.
"We have factored in the appreciation of the rupee, which keeps fluctuating. We have already requested the Reserve Bank of India to provide loans on concession to exporters," Commerce Minister Kamal Nath said after unveiling the annual supplement to the foreign trade policy 2004-09.
The slowdown in the US economy had been taken into account, he said, adding that it would not have a major impact on exports as the country's trade basket was diverse. Exports during 2006-07 touched $125 billion.
Nath said the government had also requested the RBI to ensure that cheap credit was made available to small and medium exporters. Commercial banks are required to lend 15 per cent of their total credit to export-oriented undertakings.
A commerce ministry official said it had been noticed that most banks meet the criteria by lending to a handful of large undertakings. “The RBI has been requested by the government to ensure about 50 per cent of the total credit to exporters is given to small and medium enterprises,” he said.
Nath said the developer and co-developer of SEZs would be entitled to the benefit of all duty exemptions and remission schemes like the advance authorisation scheme, DEPB and the duty-free import authorisation.
“Ninety-two SEZs have been notified till date and 50 of these are at various stages of implementation. Over 18,000 direct jobs have already been created and it is expected that as many as 1.5 million jobs will be created in the SEZs already approved,” he said.
On exemption of service tax for exports, the minister said modalities of refunds would be worked out by the commerce ministry in consultation with the revenue department of the finance ministry.
The Federation of Indian Export Organsiations (FIEO) welcomed the decision to exempt exports from service tax. To boost exports of farm products from India, Nath said the scope of the Vishesh Krishi and Gram Udyog Yojana (VKGUY) was being expanded, to include exports of value-added variants of several agricultural and forest products, including coconut oil, soyabean oil, potato flakes, meals and flour.
A new scheme for incentivising agri-processing has been introduced with status-holders being rewarded with duty credit scrips equal to 10 per cent of the value of agricultural exports, provided they use them for duty redemption on imports of cold storage, pack houses, and reefer vans among others.
The twin schemes of Focus Product and Focus Market have been enlarged to give a push to exports as well as employment by including new products and also increasing the allocation from the existing Rs.650 crore to Rs.1,000 crore.
To encourage high-technology exports a new scheme providing 10 per cent duty-free benefit on incremental exports subject to a ceiling of Rs.15 crore for each firm has been announced.
The Export Promotion Capital Goods (EPCG) scheme has been modified to make it user friendly, transparent and easy to administer. The tiny and cottage industry, which has been adversely hit by the rupee’s appreciation, has been given 12 years to complete its export obligations instead of the normal eight years.
Nath said more than Rs.150 crore has been released for settlement of pending Central Sales Tax (CST) claims of export-oriented undertakings. In case of delay in disbursement of the claims, the Development Commissioner will pay an interest from April 1, 2006.