DEPB extended upto 31/03/2008-stakeholders asked to give their views for New Scheme by May 31 - For Trade Policy details
MAJOR INITIATIVES TO GIVE FURTHER MOMENTUM TO EXPORT GROWTH ANNOUNCED AS INDIA’S EXPORTS TOUCH RECORD US $ 125 BILLION MARK

EXPORT TARGET OF US $ 160 BILLION SET FOR 2007-08-EXPORTS ENVISAGED TO RISE TO US $ 200 BILLION IN 2008-09

QUANTUM INCREASE IN FDI INFLOW AT US $ 16 BILLION in 2006-07-RECORD 725% INCREASE IN INFLOWS IN THREE YEARS -- POSITIVE TRENDS IN DIRECTIONAL FLOW OF FDI INTO MANUFACTURING AND EXPORTS

MASSIVE THRUST ON INCENTIVISING AGRI EXPORTS AND AGRO PROCESSING INFRASTRUCTURE TO CATALYSE EXPORTS FOR MORE INCLUSIVE GROWTH

VISHESH KRISHI AND GRAM UDYOG YOJANA EXPANDED TO NEW AGRI PRODUCTS

FOCUS PRODUCTS AND FOCUS MARKET SCHEME ENLARGED

EXPORTS EXEMPTED FROM SERVICE TAX

THRUST ON HANDLOOM, HANDICRAFTS, GEMS & JEWELLERY

DEPB EXTENDED UPTO 31/03/2008-STAKEHOLDERS ASKED TO GIVE THEIR VIEWS FOR NEW SCHEME BY MAY 31

NEW EXPORT PROMOTION SCHEME LAUNCHED FOR HI-TECH PRODUCTS

EASING OF EXPORT OBLIGATION FULFILMENT UNDER EPCG SCHEME

MEASURES FOR EOU AND SEZ UNITS

MAJOR STREAMLINING AND SIMPLIFICATION OF PROCEDURES TO CUT TRANSACTION COSTS

ANNUAL SUPPLEMENT TO FOREIGN TRADE POLICY UNVEILED

The Union Minister of Commerce & Industry, today unveiled the Annual Supplement 2007 to the Foreign Trade Policy 2004-09 with a slew of major initiatives to impart further momentum to India’s exports which have touched a record figure of US $ 125 billion (US $ 124.65 billion rounded off) during 2006-07. Announcing the Annual Supplement at a press conference here, the Minister said that India’s merchandise exports had almost doubled in three years-from US $ 63.84 billion in 2004 to US $ 125 billion, representing an annual compounded growth of 25% compared to 12.73% in the previous three years. During this period, India’s share of world trade had also moved from 0.76% to more than 1%, with incremental exports in the last three years creating 75 lakh additional jobs.

In this background, the Minister announced a merchandise export target of US $ 160 billion for this fiscal (2007-08) and US $ 200 billion for 2008-09. “This upward revision in our goal-up from US $ 150 billion envisaged earlier-should not be difficult to attain, given our strong economic fundamentals, the entrepreneurship of our exporting community and the collective resolve of government and trade & industry”, Shri Kamal Nath said.

Stating that a liberal export policy had a direct effect on foreign direct investment (FDI) flows and that the two were closely inter-linked, Shri Kamal Nath announced that FDI (equity) inflows had gone up to almost US $ 16 billion from US $ 5.5 billion in the previous year. The last three years had seen a staggering 725% increase in FDI inflows up from US $ 2.22 billion in 2003-04 to US $ 16 billion in 2006-07, he said, adding that the directional flow of FDI into manufacturing and export of goods and services was contributing immensely to the country’s export efforts.

Announcing a series of measures to boost exports of agricultural products from India, Shri Kamal Nath said that the scope of 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 & flours, cardamom, food preparations like soups, sauces, artistic wooden furniture, herbal extracts of forest products, malt and minor forest produce, etc.

A new scheme for incentivising agro processing has been introduced with status holders being rewarded with duty credit scrips equal to 10% of the value of agricultural exports, provided they use them for duty redemption on imports of cold storage, pack houses, reefer vans, etc. This would be over and above the benefits available from the existing schemes of Ministries of Agriculture and Food Processing, etc. “I lay the highest emphasis on developing agricultural exports to ensure that product diversification improves in Indian agriculture. As we all know, we have widespread subsistence farming which has to move towards producing marketable surpluses, be it for domestic or export markets”, Shri Kamal Nath said.

The twin schemes of Focus Product and Focus Market have been enlarged to give a push to exports as well as employment. Not only are new products being included in the Focus Product Scheme (Mica and its variants, barley, oats, soyabean, cigar/cheroots, bovine fats and copra) but also the allocation for the Scheme is being increased by more than 50% from the existing Rs.650 crore to Rs.1000 crore. Also, 16 new countries including 10 CIS countries are being included under the Focus Market Scheme. The 16 countries are: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Tajikstan, Turkmenistan, Ukraine, Uzbekistan, El Salvador, Dominican republic, Guatemala, Trinidad & Tobago, Serbia & Montenegro and Uruguay.

Giving a special focus on handloom and handicrafts industry, Shri Kamal Nath announced that exemption from duty is being granted on the machinery and equipment needed for effluent treatment plants required by handloom and handicraft industries, to enable these sectors to meet environmental and other standards abroad. In a similar measure to further support the cottage and the tiny industrial sector, the export obligation period under EPCG Scheme for them is being increased from 8 to 12 years.

Providing a further push to export thrust sectors, the Minister announced duty free import of tools, machinery and equipments for handicrafts and gem & jewellery sectors. To facilitate the certification of diamonds as a pre-requisite to ensuring quality and competitiveness of exports, the testing facility at Dubai has been included in the approved list of certifying agencies.

To encourage high technology exports Shri Kamal Nath announced a new scheme providing 10% duty free benefit on incremental exports subject to a ceiling of Rs.15 crores for each firm/company. The list of products to be covered under high technology exports will be notified shortly in consultation with concerned administrative ministries.

In a major initiative to facilitate export of services from India, Shri Kamal Nath announced that all services rendered abroad and charged on exports from India would henceforth be exempted from payment of service tax. “This was a long pending demand of our exporting community and I am happy to be able to accede to it. Similarly, service tax on services rendered in India, but utilized by exports would be exempted or remitted. A remission mechanism, where exemption is not available, is being put in place in consultation with Department of Revenue”, he said.

To enhance competitiveness of Indian exports, Shri Kamal Nath also announced rebating of customs duty on fuel and the 4% special additional duty for non-Cenvatable sectors under the Duty Entitlement Pass Book (DEPB) scheme. Stating that the DEPB scheme stands extended for another year upto 31/03/2008, Shri Kamal Nath asked all stakeholders especially Export Promotion Councils (EPCs) and Commodity Boards to give their views to the DGFT by May 31, 2007 to enable a new scheme to take its place by next year.

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 rupee appreciation has been given 12 years time to complete the export obligation instead of normal period of 8 years.

Spares, tools, refractory would now be allowed under EPCG scheme for the existing plant and machinery also which may not have been imported under EPCG. This will help the industry to modernise and upgrade the production facility.

With a view to reward performers, the average exports under EPCG scheme has been rationalised. Wherever more than one EPCG authorization are issued concurrently, fresh EPCG authorization would be based upon last required average exports notwithstanding the actual achievement.

With a view to simplify monitoring of export obligation, block-wise fulfillment of export obligation has been dispensed with. The export obligation under EPCG, which was hitherto based on the past exports of the products for which EPCG authorisation was being claimed, would now be based on the average exports of the firm/company. This will generate additional exports for the country and would encourage units to add to their existing exports.

In cases where exporter is unable to fulfil the export obligation because of force majeure or other unforeseen circumstances, waiving of export obligation would be considered.

The EPCG holder will now have the option to submit a certificate either from Chartered Engineer or Jurisdictional Excise Authority regarding installation of capital goods imported under EPCG scheme.

In order to increase exports from 100% Export Oriented Units (EOUs), benefit of Focus Market Scheme, Focus Products Scheme and Vishesh Krishi and Gram Yojana Scheme have been extended to those EOUs which are not availing Direct Tax benefits. More than Rs.150 crores has been released for settlement of pending Central Sales Tax (CST) claims of EOUs. In case of any delay in the disbursement of CST, the Development Commissioner would be providing interest on such delayed disbursement with effect from 1.4.2006.

100% EOUs are entitled from exemption from income tax on the goods manufactured and exported from the EOUs under Section 10B of the Income Tax Act. A number of instances were reported wherein this benefit was being denied by the Income Tax authorities by raising the doubts whether the activity amounts to manufacturing or not. To remove this uncertainty, definition of manufacturing was being incorporated under the Income Tax Act, the Minister said.

The developer and co-developer of the Special Economic Zone (SEZ) would be entitled to the benefit of all duty exemption and remission schemes like advance authorization scheme, DEPB and Duty Free Import Authorisation (DFIA). On SEZs, the Minister said: “92 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 would be created in the SEZs already approved”.

In a major effort to reduce the high transaction cost faced by exporters, Shri Kamal Nath that the existing procedures under various export promotion schemes had been simplified considerably with a view to achieving transparency, accountability and bringing down transaction costs. “Aayat Niryat form for all schemes has been thoroughly reworked out. The repetitive and not so relevant informations have been dispensed with. The revised Aayat Niryat form is being notified simultaneously. Similar exercise will be carried out for all other forms. Transaction time is sought to be reduced further through Electronic Data Interchange (EDI) system. The verification at the Customs end has already been dispensed with for the Duty Entitlement Pass Book Scheme. This facility is now being extended to EPCG and the Advance Authorization Scheme as well”, he said.

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