Financial Daily from THE HINDU group of publications
Wednesday, Sep 01, 2004
Industry & Economy
`Export target challenging, but achievable' New scheme soon to replace duty entitlement passbook, says Kamal Nath
The Commerce and Industry Minister, Mr Kamal Nath, along with the Minister of State for Commerce and Industry, Mr E.V.K.S. Elangovan (left), and the Commerce Secretary, Mr Dipak Chatterjee, releasing the Foreign Trade Policy document in the Capital on Tuesday. Kamal Narang
New Delhi , Aug. 31
THE Union Commerce and Industry Minister, Mr Kamal Nath, on Tuesday said that the goal of pushing up the country's merchandise exports to 1.5 per cent of world trade by 2009 was challenging but not insurmountable.
During 2003-04, India's merchandise exports were valued at $63.45 billion, accounting for about 0.8 per cent of world exports. If this share were to be doubled to about 1.5 per cent, it would mean that the country's exports would have to touch around $195 billion by 2009, assuming a 10 per cent compounded annual growth rate in world trade.
"It is a challenge, given that we are confronted with problems such as congestion in ports, high oil prices and the issue of a strengthening rupee. But unless we aim high, we will not be able to sort out these problems. I see this target as driving infrastructural improvements for exports", Mr Kamal Nath told presspersons after unveiling the Foreign Trade policy for 2004 to 2009.
On the duty entitlement passbook (DEPB) scheme, which is proposed to be discontinued with effect from April 1, 2005, the Commerce Minister assured exporters that it would be replaced by a new scheme, "which will be drawn up in consultation with exporters".
The DEPB scheme is a facility that provides credit to exporters, which can be used for the import of capital goods, raw materials, intermediates, components, parts and packaging material.
The credit fixed as a specified percentage of the free-on-board value of exports made in freely convertible currency is intended to help exporters neutralise the incidence of customs duty on the import content of the export product.
Mr Kamal Nath also defended the move to allow import of second-hand capital goods without any age restrictions under the Export Promotion Capital Goods (EPCG) scheme. Currently, second-hand capital goods that are more than 10 years old cannot be imported under the EPCG scheme.
"I don't think this would lead to India becoming a dumping ground for old machinery and equipment. The decision has been taken after a considered view. It is also a long pending demand of industry here that the age restriction should go. It will also not place the domestic producers of capital goods at a disadvantage", the Minister told Business Line, when asked whether the proposed move would imply lesser protection for the domestic producers of capital goods.
On the proposed transformation of Pragati Maidan in the Capital into a world-class complex, Mr Kamal Nath said that the transformation would be done at a cost of Rs 1,164 crore. "There will be no budgetary outlay for this. I am looking at India Trade Promotion Organisation for this purpose", he said. The Minister also maintained that the proposed free trade and warehousing zone (FTWZ) scheme is not in contradiction with the special economic zone (SEZ) scheme. "The main purpose of FTWZ is to make India into a global trading-hub", he said.
The location of the SEZ for handicrafts would be decided after considering the recommendation of the export promotion council for handicrafts.
The Director General of Foreign Trade (DGFT), Mr G.K.Pillai, later told presspersons that no manufacturing activity would be permitted in a FTWZ and such zones would be deemed to be foreign territory.
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