| Nath is pushing for market and product-based incentives in the foreign trade policy in order to achieve the objective of doubling India's share in world trade to 1.5 per cent by 2009 and increase employment in the export oriented sectors. |
| There have been sharp differences between the finance and commerce and industry ministries regarding sops for exporters. North Block has been emphasising the need to curtail the sops on account of revenue foregone due to the export schemes. |
| The revenue foregone on account of export-linked schemes was Rs 35,430 crore in 2004-05, which is expected to increase to around Rs 49,000 crore in the next fiscal. |
| An inter-ministerial committee to review export schemes had recently suggested that some incentive-based schemes like Target Plus should be discontinued as they were not compatible with the World Trade Organisation (WTO) and could invite countervailing action. |
| The contention of the Commerce and Industry Ministry, on the other hand, has been that the finance ministry should not count duty reimbursed to exporters as revenue foregone since the government does not intend to tax exports. |
| To this end, the ministry has been pressing for exempting exporters from taxes such as service tax and central sales tax as these were collected and later reimbursed to them, adding to their transaction costs. |
| It might be recalled that a new scheme to replace the popular duty neutralisation scheme called the Duty Entitlement Passbook Scheme has still not been approved following differences of opinion regarding reimbursement of duties borne by the exporters on electricity. |
| North Block is of the view that levies like electricity duty should be reimbursed by the states, while the commerce ministry has said that the duties could be reimbursed by the Centre in the interim period until a final decision was reached. The matter has now been referred to the Cabinet Committee on Economic Affairs. |
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