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India:Foreign trade policy announced |
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2004-9-1
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“To double our percentage share of global merchandise trade within the next five years; and to act as an effective instrument of economic growth by giving a thrust to employment generation,” would be the corner stones of India’s foreign trade policy according to Kamal Nath, the Commerce Minister.
Emphasising on India’s role as a major player in the world trade, he called for a ‘comprehensive view’ required to be taken for the development of country’s foreign trade.
Acknowledging the shortfalls of Exim Policy, he called for an integrated approach for economic and national development.
He noted the process as ‘transparent, and in partnership with trade’ in formulating the Foreign Trade Policy acknowledging the fact that over 3000 suggestions from among exporters, individuals, groups etc. were received that were considered before creating the policy document.
The two-fold objective of this Policy is proposed to be achieved by adopting, among others, the following strategies:
i.Unshackling of controls and creating an atmosphere of trust and transparency
ii.Simplifying procedures and bringing down transaction costs.
iii.Neutralizing incidence of all levies and duties on inputs used in export products, based on the fundamental principle that duties and levies should not be exported.
iv.Facilitating development of India as a global hub for manufacturing, trading and services.
v.Identifying and nurturing special focus areas which would generate additional employment opportunities, particularly in semi-urban and rural areas, and developing a series of ‘Initiatives’ for each of these.
vi.Facilitating technological and infrastructural upgradation of all the sectors of the Indian economy, especially through import of capital goods and equipment, thereby increasing value addition and productivity, while attaining internationally accepted standards of quality.
vii.Avoiding inverted duty structures and ensuring that our domestic sectors are not disadvantaged in the Free Trade Agreements/Regional Trade Agreements/Preferential Trade Agreements that we enter into in order to enhance our exports.
viii.Upgrading our infrastructural network, both physical and virtual, related to the entire Foreign Trade chain, to international standards.
ix.Revitalising the Board of Trade by redefining its role, giving it due recognition and inducting experts on Trade Policy.
x.Activating our Embassies as key players in our export strategy and linking our Commercial Wings abroad through an electronic platform for real time trade intelligence and enquiry dissemination.
Specific sectoral strategies have been prepared under the Special Focus Initiatives for Agriculture, Handicrafts, Handlooms, Gems & Jewellery and Leather & Footwear sectors. Further sectoral initiatives in other sectors would be announced from time to time, he said.
The threshold limit of designated ‘Towns of Export Excellence’ is reduced from Rs.1000 crores to Rs.250 crores in these thrust sectors.Export of these products shall qualify for duty free credit entitlement equivalent to 5% of FOB value of exports. The entitlement is freely transferable and can be used for import of a variety of inputs and goods.
Duty free import of trimmings and embellishments in these sectors is increased to 5% of FOB value of exports. These shall also be exempt frm CVD.
The Handicraft Export Promotion Council shall be authorised to import trimmings, embellishments and samples for small manufacturers, who are unable to do this on their own, and so get deprived of this facility.
A new Handicraft Special Economic Zone shall be established.A package for the Leather & Footwear industry was announced too. The new facilities include:Duty free entitlements of import trimmings, embellishments and footwear components increased to 3% of FOB value of exports.
Duty free import of specified items for the leather sector increased to 5% of FOB value of exports.In order to enable the leather industry to meet the requirements of pollution control, machinery and equipment for Effluent Treatment Plants for the leather industry shall be exempt from Customs Duty.
To accelerate growth in export of services so as to create a powerful and unique ‘Served from India’ brand instantly recognized and respected the world over, the earlier DFEC scheme for services has been revamped and re-cast into the ‘Served from India’ scheme.
A number of improvements have also been made to the EPCG Scheme. It includes fulfillment of export obligation in order to reduce difficulties of exporters of goods and services, technological upgradation has been facilitated and incentivised, transfer of capital goods to group companies and managed hotels shall now be permitted under EPCG, redundancy of requirement of installation certificate from Central Excise, among others.
He also announced the continuation of DEPB would be continued until replaced by a new scheme – and this new scheme will be drawn up in consultation with exporters.
A new rationalized scheme of categorization of status holders as ‘Star Export Houses’ has been introduced, designating them from One Star to Five Star, depending on their total imports during the current and previous three years.
The entry level for qualifying for status is now Rs. 15 crores in three years. We are confident that this will bestow status on a large number of hitherto unrecognized small exporters.
Star Export Houses shall be eligible for a number of privileges including fast-track clearance procedures, exemption from furnishing of Bank Guarantee, eligibility for consideration under Target Plus Scheme etc.
Recognizing that EOUs perform a role similar to that of SEZ units in boosting exports the Minister announced that exempted from Service Tax in proportion to their exported goods and services, would be permitted to retain 100% of export earnings in EEFC accounts, Income Tax benefits on plant and machinery shall be extended to DTA units, which convert in to EOUs etc.
A new scheme to establish Free Trade and Warehousing Zones has been introduced to create trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency. This was aimed at making India into a global trading-hub, said Kamal Nath.
He said FDI would be permitted up to 100% in the development and establishment of the zones and their infrastructural facilities.Each zone would have a minimum outlay of Rs. 100 crores and five lakh sq. mts. built up area.Units in the FTWZs would qualify for all other benefits as applicable for SEZ units.
Common Facility Centres would be established for use by home-based service providers, particularly in areas like Engineering & Architectural design, Multi-media operations, software developers etc., in State and District-level towns, to draw in a vast multitude of home-based professionals into the services export arena, added Kamal Nath.
As a commitment towards reducing transactional costs and simplifying procedures the Minister announced adoption of certain rationalization procedures.
In order to showcase our industrial and trade prowess to its best advantage and leverage existing facilities, Pragati Maidan would be transformed into a world-class complex with added facilities, he said.
“This Policy is essentially a roadmap for the development of India’s foreign trade. It contains the basic principles and points the direction in which we propose to go.It is in partnership with business and industry that we propose to erect milestones on this roadmap,” rounded off Kamal Nath. |
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