Cheaper, simpler deals await exporters

NEW DELHI: The government is likely to announce an interim foreign trade policy on February 26. The policy will include measures to simplify
procedures and cut transaction costs for exporters and importers facing fierce competition in a contracting global market, a government official said.

Measures on the cards include an increase in the time limit for meeting export obligations against duty-free imports of machinery and raw materials, allowing exporters to get benefits under duty reimbursement schemes without waiting for export proceeds, allowing revalidation of expired licences for duty-free imports and reducing the average export obligation of exporters.

“While we may not be in a position to give more fiscal sops to exporters, we can certainly make the going easier for them by bringing in some procedural simplifications and measures to bring down transaction costs,” the official, who asked not to be named, told ET.

In the interim budget last week, acting finance minister Pranab Mukherjee announced just one benefit for exporters: allowing the continuation of the interest rate subvention scheme. The scheme allows exporters from sectors such as textiles, handicrafts, gems & jewellery, marine products and leather to avail credit at a discounted rate. Exporters are hopeful of getting more benefits in Mr Mukherjee’s reply to the debate on interim budget on Tuesday.

One major incentive exporters could look forward to in the next week’s interim trade policy is a delinking of grant of benefit under the duty entitlement pass book (DEPB) scheme, a duty reimbursement scheme for exporters, with the realisation of export proceeds.

Under the present norm, exporters can claim back duty only when they get their export proceeds. However, with exporters’ payments getting delayed due to the credit crunch, exporters had requested the government to delink the two.

To make it easier for industry to meet its export obligations at a time of declining orders, the government could give importers of duty-free machinery under schemes such as the export promotion capital goods (EPCG) more time to meet their export obligations. The average export obligation for exporters may also be reduced, the official said.

Because of the industrial and trade slowdown, many licence-holders for duty-free imports of capital goods have not been able to use their licences, which have since expired. The government could revalidate the licences.

The commerce ministry has to come up with its policy soon, as once the dates for the general elections are announced and the model code of conduct kicks in, no new announcements can be made. The commerce minister in the previous National Democratic Alliance government, Arun Jaitley, had also similarly announced a mini trade policy in January 2004 just before the announcement of election dates.

Source: http://economictimes.indiatimes.com/