The commerce ministry has constituted a committee to draw up the contours of the new five-year exim policy that will replace the present policy by the end of this financial/ licensing year.
The committee begins its task at a time when exports are declining and the prospects of high growth in world trade do not look all that bright. No doubt, exporters, through the export promotion councils and industry associations, will press for the continuation of the duty entitlement passbook (DEPB) scheme or a suitable alternative that gives them subsidies, cleverly hidden.
The Commerce Minister had announced last year itself that the DEPB scheme will be phased out in April 2002. So far, however, the exporters have failed to come up with acceptable alternatives.
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The suggestion to adopt a six-digit classification for All Industry Rates of Duty Drawback has met with no favour from the finance ministry. The Duty Drawback Department has successfully resisted the attempt of the Director General of Foreign Trade (DGFT) to limit the 'nexus' criteria to sensitive items and thus make the advance license scheme more user-friendly.
The DGFT had announced in April that he will constitute a committee to evolve alternatives for the DEPB scheme but no such committee has been constituted yet. Exporters do not know what awaits them if the DEPB scheme is abolished.
The commerce minister had announced in April this year that a medium term export strategy will be drawn by July. But, that has not happened. What is the framework within which the newly constituted committee will operate is anyone's guess.
In short, exporters are in the dark. No doubt, they will rush to cash in on the existing DEPB scheme before April 2002. That may be one reason for the commerce minister to hope that exports will pick up in the second half of the current year and that a 12 per cent export growth is an achievable target. The finance minister might well upset his calculations by abolishing special additional duty (SAD), in which case, the present DEPB premiums of about 110 per cent will crash to less than 100 per cent.
The present uncertainty is undesirable. The exporters need to know how the new policy is shaping up. There needs be no secrecy about exim policy. After all, the days when selected leaks about import policy could benefit select industries and bureaucrats are over. The need of the hour is transparency, predictability and continuity.
In India, the credibility of all committees is rather low. There are always doubts about the quality of the committee members and whether they serve any useful purpose. The way to overcome cynicism is to let the media and stake-holders attend the proceedings as observers and host a transcript of the proceedings on websites. Let all the suggestions received be made public. That can lead to more informed debate in the media, show up the worth of committee members and help evolve a policy that has greater acceptance.
There is nothing wrong even if a draft exim policy is made public much before it comes into effect. The revenue department notified in March the new central excise rules to come in effect from July. On the basis of feedback, the rules were amended before they became effective. That ensured a smooth transition. The example is worth emulating.