Farm goods exporters to get fiscal incentives

THE CMP EFFECT

The new five-year Foreign Trade Policy moots a special package to boost agro-exports by offering fiscal incentives to exporters. It includes launching a special farm produce scheme called Vishesh Krishi Upaj Yojana (VKUY) to promote the export of fruits, vegetables, flowers and minor forest produce and their value-added products and permission for duty-free import of capital goods for installation anywhere in the agri-export zones (AEZs).

The procedures for the import of seeds, bulbs, tubers and planting material and the export of plant portion, derivatives and extracts have been liberalised. The measure is expected to help facilitate the production of export-worthy agricultural products. It will also help boost the export of medicinal plants and herbal products. Announcing the new policy, commerce minister Kamal Nath said a special farm-export package has been proposed in view of the sector's potential to bring prosperity to rural people and enhance employment in the poorest regions of the country.

Under the VKUY, the exporters of fresh and processed fruits, vegetables, flowers and minor forest produce will be entitled for duty credit scrip equivalent to 5 per cent of the free-on-board value of exports for each licensing year commencing from April 1, 2004.

The scrip and items imported against it will be freely transferable and can be used for the import of inputs and goods, including capital goods. The duty credit certificate will be valid for two years. Imports from a port other than the port of export will also be allowed.

Additional customs and excise duty paid in cash or through debit under this scheme will be adjusted as CENVAT credit or duty drawback. The new policy allows the funds available under the export promotion capital goods (EPCG) scheme to be utilised for the development of AEZs. The agro units in these zones will have the facility of moving the capital goods imported under the EPCG within the zone.

The EPCG licences issued to agro units in AEZs will be allowed to fulfill their export obligations within a period of 12 years reckoned from the date of issue of the licence.