FinMin says it can't forgo more revenue

RUN-UP TO THE FOREIGN TRADE POLICY

The finance ministry has taken an emphatic view of the annual supplement of the Foreign Trade Policy which will be unveiled tomorrow.

It has clearly stated that it is in no position to forego any more revenue but is open to suggestions on procedural matters.

The supplement is a result of intense talks on nearly 131 issues between commerce and finance ministries.

While the exact details of the amendments will be known tomorrow, the department of commerce had, over a month ago, sent nearly 100 proposals to the finance ministry. Some of these related to procedures mooted by Commerce Minister Kamal Nath.

The finance ministry had its own set of proposals, as many as 31, for changes to the policy. These proposals were discussed at length and obviously took time to be finalised given that the policy was originaly scheduled to be announced a week earlier, on March 30.

The finance ministry stressed in the discussions that all measures on which it "agreed" with the commerce ministry be implemented in toto.

However, when confronted with proposals like a zero-duty EPCG regime, the revenue department said the proposal was not acceptable.

"The duty forgone under the scheme by December 2005 was Rs 3,680 crore. As the scheme is otherwise attractive, there is no need for opening another window", it said.

The finance ministry repeatedly told the commerce ministry that continuation and expansion of schemes like Vishesh Krishi Gram Udyog Yojana was not possible as they were "incompatible" with WTO rules.

It said the same about the duty entitlement passbook scheme (DEPB) scheme as "there is no nexus between imported inputs and exported products and the fact that DEPB scrips are transferable".