The Hindu Business Line : Export promotion measures — DGFT begins work on WTO compatibility

THE office of the Director General of Foreign Trade (DGFT) has put together an in-house group to work on the modalities of realigning the existing export promotion measures to make them more compatible with WTO obligations as well as to retain their flexibility and user-friendliness to trade and industry.

Disclosing this to Business Line in his first interview to the media here, the new DGFT, Mr K.T. Chacko, said that as in the new Foreign Trade Policy announced on August 31, the existing Duty Entitlement Passbook Scheme (DEPB) for duty remission on imported inputs would continue till the end of the current fiscal.

"We have already initiated the process of inviting inputs from trade and industry and some haveresponded. The revenue department is also seized of the matter and is looking at the various possible options. We have also requested industry associations such as the Confederation of Indian Industry (CII) to work out their own formulations; and professional bodies and consultants have been approached with a view to consulting all stakeholders," Mr Chacko said.

Asked whether there is any difference of view on persisting with export promotion measures , the DGFT said, "The bottom-line is that the departments of revenue and commerce have a convergence of view that duties and taxes should not be exported. Once that is accepted, it is only operationalising that for which you have to put a mantle as to how this could be tailored. The need to unshackle trade and industry from the burden of incidence of duties and taxes from its exports is duly recognised.

"One can't expect an exported product to carry incidence of duty and compete in the external market. Hence, nullification of incidence of duty or remission of duty in the form of DEPB credit and drawback rates has been in existence. This is not any sort of appeasement or cash dole to the exporters but legitimate remission of duties which in the first place are not supposed to be imposed upon," Mr Chacko maintained. He said that as the general level of tariff was being brought down, there was bound to be revision in DEPB rates and drawback rates disbursed to industry and trade as it happened recently in the case of engineering and steel products. He said that exporters suffer a lot in terms of high transaction cost in the form of sales tax and octroi and "hopefully with the value-added tax on the anvil, some of these problems could be mitigated."

To a specific query about operationalising the new Foreign Trade Policy schemes, Mr Chacko said that except for a few schemes such as Vishesh Krishi Upaj Yojana (to boost exports of fruits/vegetables, flowers, minor forest produce and their value-added products) which would be launched from next fiscal and even target plus scheme (qualified for duty-free credit based on incremental exports substantially higher than the general actual export target fixed), the Government has gone ahead in this regard.

"Wherever the notification is yet to be issued, working out details is in progress with regular interaction at all levels. The new Revenue Secretary, Mr K.M. Chandrasakhar, has taken initiatives and has been consulting with the Commerce Secretary Mr S.N. Menon," he added.

He said that there has been a "remarkable improvement" in the compliance level of export obligation by units availing themselves of various export promotion schemes ever since the targeted monitoring by regional outfit of the DGFT.

He said import facilitation to trade and industry is as important as export facilitation, particularly in terms of the right type of raw material and capital goods for exports and manufacturing activity in the country.

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