Commerce, finance spat over trade policy

A standing committee to work on sorting out the differences.

Exporters may have to wait for a while before some of the announcements made in the Foreign Trade Policy take effect, thanks to a turf war between the commerce and revenue departments.

The revenue department has objected to several provisions in the policy related to Export Promotion Capital Goods (EPCG), Served from India and the Target Plus schemes on the grounds that the amendments were announced without it being consulted.

On the other hand, the commerce department is of the opinion that most issues pertain to procedural simplification and have no revenue implications.

One of the areas of contention is the provision to extend the export obligation period under the EPCG scheme to three years with 50 per cent enhanced export obligation and to five years with 100 per cent enhanced export obligation. The provision to allow clubbing of two advance licences issued in a year against the earlier provision to allow clubbing only under the same Customs notification is another contentious issue.

Similarly the revenue department has objected to the provision of doing away with the requirement of submitting a chartered accountant's certificate for hotels and restaurants under the Served from India scheme.

The provision under the Target Plus scheme allowing import of goods having a "broad nexus" with products exported has also been objected to by North Block.

This is the second year in a row that differences between the two departments have delayed the implementation of the announcements.

Sorting it out

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• A standing committee to work on sorting out the differences
• All FTP-related proposals forwarded by the commerce ministry to be scrutinised
• The committee will send its recommendations to the CBEC
• The panel will monitor implementation of the measures