India's trade policy targets $160 B in exports

Thursday, 19 April 2007, 07:00 Hrs
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New Delhi: Commerce Minister Kamal Nath Thursday set a target of $160 billion in merchandise goods for this year and extended some fiscal sops to services exports in the annual update of India's foreign trade policy.

Unveiling the updated policy, which runs from 2004-09, Kamal Nath also said that the duty entitlement passbook scheme, an incentive package that is popular among exporters, would be extended till a new format comes into force in March 2008.

"When the United Progressive Alliance (UPA) government assumed office in 2004, our merchandise exports were $63.84 billion. In the year ended March 2007, the exports surged to $125 billion," Kamal Nath said.

"We have crossed many milestones to emerge as a major trading nation. In this background, the merchandise export target of $160 billion is being set for the current year 2007-08 and $200 billion for 2008-09," he added.

"This upward revision in our goal should not be difficult to achieve, given our strong economic fundamentals, the entrepreneurship of our exporting community and the collective resolve of the government, trade and industry," he said.

"I am encouraged by the efforts of the exporting community, which, despite the spiralling oil prices, strengthening of the rupee and many other constraints, has achieved the ambitious targets set by us in 2004."

Announcing other proposals of the updated trade policy before representatives of industry and export promotion councils, the minister said developers of special economic zones would now be exempted from all duties and remission schemes.

"Ninety-two special economic zones have been notified to date and 50 of these are at various stages of implementation," he said, and added these projects had attracted 135 billion in investment with 400 billion more in the pipeline.

Kamal Nath also announced that the scope of the 'focus product and focus market scheme' was being enhanced with more items under it and a step up in the fiscal allocation to 10 billion from the existing 6.5 billion.

"Also, 16 new countries, including 10 Commonwealth of Independent States (CIS) are being included in the 'focus product and focus market scheme'," he added.

The commerce minister said riding on a liberal export policy, India had also witnessed a quantum jump in the inflow of foreign capital from a mere $2.2 billion in 2003-04.

"The year 2006-07 has seen our foreign direct investment equity inflows go up to almost $16 billion from $5.5 billion in the previous year - almost tripling the inflows in just one year," he said.

"In line with international practice of including retained, reinvested earning, our foreign direct investment inflows touch $19 billion in 2006-07, constituting 2.3 percent of our gross domestic product," he added.

Kamal Nath said the foreign trade policy would continue to be guided by the main aim of making exports oriented toward inclusive growth with special incentives for farm products, handlooms, handicraft, cottage industries and jewellery.

"With a view to facilitating exports from India, all services rendered abroad and charged on exports from India would henceforth be exempted from the payment of service tax," he said.

"Similarly, service tax on services rendered in India but utilised by exporters will be exempted. A remission mechanism where exemption is not available is being put in place in consultation with the Department of Revenue."

The minister also promised to help exporters in cutting transaction costs and the burden on account of procedural delays. "It is of utmost importance that we streamline our procedures and adopt global best practices."

This measure was particularly greeted by the industry. "This will ensure service taxes are not exported. To that extent it will help retain our competitiveness," said the Federation of Indian Chambers of Commerce and Industry (Ficci).

To encourage high technology exports Kamal Nath announced a new scheme that will provide 10 percent duty free benefit on incremental exports subject to a ceiling of 150 million. The products covered by this scheme would be notified soon.

The other highlights of the updated foreign trade policy are:

-Export target for 2008-09 set at $200 billion

-Service tax exempt for services exports

-Obligations under the export promotion capital goods scheme eased

-Fresh incentives for special economic zones promised

-Focus on Commonwealth of Independent States

-Trade deficit expands to $57 billion

-Total imports for this fiscal pegged at $181.37 billion

-Oil imports jump to $57.3 billion

-Foreign direct investment at record $16 billion in 2006-07

-Scope of focus products, focus market scheme enlarged

-Measures for SEZ units

-Initiatives for development of cold storages, packaging

-New scheme to promote export of high-technology products
Source: IANS
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