Key export sops extended on fragile recovery

The government extended a number of incentives for exporters in a bid to support growth in exports amid tentative recovery in the global markets.

Releasing the annual supplement to the country’s foreign trade policy, commerce and industry minister Anand Sharma said there was uncertainty as recovery in the global economy was still fragile.

“Even as global economics rebalancing is proceeding apace, it is not going to be an easy patch for our exporters,” Sharma said releasing the supplement.

“Economies around the world are still emerging out of the shadows of a grim recessionary period. There has been a marginal improvement in some of the developed economies...

However, there is still nervousness in the market about the fiscal situation and sovereign indebtedness in several high-income nations,” the minister said.

Sharma stressed the need to continue with incentives to exporters, as the developed economies attempt for an export-led recovery.

“It is expected that the developed countries would aim at economic recovery through consolidation and export-led growth,” he said.

Sharma expressed confidence that India will achieve its export target of $200 billion this year.

Among key incentives, the government extended the popular tax refund plan, Duty Entitlement Pass Book scheme for another six months. The scheme was earlier set to lapse in December.

“I’ve been able to obtain extension of DEPB one last time from the finance ministry for a period of six months. The scheme will now lapse in June,” he said.

Under this scheme, the government reimburses duty paid on imports of inputs used for manufacture of export goods. This is provided by way of duty credit at specified rates.

It also extended the zero duty Export Promotion Capital Goods scheme by one year to March 31, 2012. The scheme will now also cover chemicals, allied products, rubber, marine products, sports goods and toys and certain engineering goods.

In addition, an interest subvention of 2% will be extended to manufacturers of leather, jute, engineering goods and textiles.
The Status Holder Incentive Scheme, that provides incentives to trading and export houses has been extended to March 31, 2012, the government said. The scheme will also cover sectors covered under the ambit of the zero-duty EPCG scheme. The new incentives to the export sector are expected to cost the government about `1,050 crores.

On reducing export transaction costs, Sharma said, the task force headed by minister of state for commerce Jyotiraditya Scindia will soon come out with a report.

“We see transaction costs coming down by 40% soon, if not more. The task force is presently in the process of consultation with the concerned administrative ministries to finalise modalities and timelines of implementation of agreed interventions,” Sharma said.

The minister said there was no proposal as of now to roll back the ban on exports of non-basmati rice and wheat.

“Rains have been a welcome development... As of now, there is no proposal to roll back the ban on non-basmati and some other commodities,” Sharma said, adding that any changes in this policy, if needed, will be made at an appropriate time.

The government had banned export of non-basmati rice in 2007 to temper domestic prices.

India has been selectively allowing export of certain non-basmati rice varieties, mainly to the African and some neighbouring countries.

“Food price inflation implies that we need to pay close attention to domestic availability. That is why we were obliged to restrict certain exports,” the minister said. He said import duty exemptions on edible oils will also be maintained at current level.

In 2008, India had scrapped import duty on crude edible oils and cut that on refined edible oils to 7.5% from 27.5%. Industry has been seeking levy of at least 10% import duty on crude edible oils and hiking that on refined edible oils to 17.5% to protect local farmers’ interest.

NewsWire18