Exporters have some reason to feel good

MINI EXIM POLICY 2004- IMPACT

While exporters' anxieties about the appreciating rupee remain, I must say that the Exim Policy measures announced by Commerce and Industry Minister Arun Jaitley have come as a whiff of fresh air for exporters.

Jaitley and his team have understood the ground reality of exports, and have done the optimum they could under the circumstances to strengthen exporters, while encouraging the trade and industry to exploit the country's immense manufacturing and R&D capabilities at the same time.

The measures are bold, innovative and comprehensive, covering all segments of exports - merchandise, services and project exports etc.

The government objectives of making India a manufacturing hub for producing internationally competitive goods and services, reducing transaction costs, and imparting greater transparency in export administration should undoubtedly be achieved when seen against the steps envisaged to streamline and upgrade administrative rules and instruments.

Simplifying export administration through e-commerce initiatives is a major objective, which is getting implemented vigorously.

From the exporters' angle, I must say that despite their concern about the rupee appreciating against the dollar, and also the euro, the measures have infused a new spirit of confidence, which should translate into higher incremental export growth.

While most of the measures are positive and welcome to the exporting community, I would single out a few specific ones, which are truly path-breaking. Introduction of the Gold Card scheme for exporters with proven track record for easy availability of export credit, would hopefully serve the exporters' problem, who were not getting dollar loans from the banks.

The launching of the N.E.I.F for underwriting high value projects would benefit turnkey contractors and project experts. Increase in equity base of ECGC would result in better risk management and expedition settlement of exporters' claim.

The decision to count rupee payments received for port handling services for discharge of export obligations under the EPCG scheme, the decision to allow imports of prototypes to actual users without any limit to boost R&D activities and the decision to allow import of duty-free fuel with actual user condition under the DFRC Scheme, the reintroduction of advance licence for free of cost material, and the refixation of export obligation of past EPCG licence in line with the present policy (export obligation to be eight times of duty saved instead of five times of CIF value), and allowing clubbing of EPCG licence for discharge of export obligation are all most pragmatic.

Besides the measures I have mentioned, I would also term the extension of deemed export facility for items having zero per cent basic customs duty, allowing free imports of gold and silver, and duty-free imports of capital goods by heritage hotels, 1 or 2 Star hotels and Stand Alone Restaurants as extremely positive steps.

The facilitation measures, including initiatives like Digital Signature and Electronic Fund Transfer and Message Exchange with community partners like Customs, Banks etc., as well as allowing the clubbing of EPCG licences and issuing split up licences for duty-free import scheme for the service providers are also measures that should see greater transparency and reduction of discretion as intended by the government.

Overall, I would say the new Exim Policy measures have identified some of the major strengths of the country which have been recognised internationally i.e. its huge capability in the field of manufacture at low cost, as well as brainpower, which, again, has been internationally recognised by a number of front-ranking IT and related research organisations by making India a major centre for their R&D activities.

The fact that these measures are to be translated into action is endorsed by the inauguration of the Digital Signature and Electronic Fund Transfer facility. However, we expected the government to have a pragmatic look on the threshold limit for status holders particularly in the wake of the appreciation of the rupee.

Five per cent EPCG should have been converted and zero duty EPCG in view of reduction of peak duty and abolition of SAD. We were hoping that verification of licence by customs would be done away with in this year, but it seems we have to wait a little longer.

We in the Federation of Indian Export Organisations now have a larger "feel good" factor infusing us as December figures for exports show a jump of plus 40%. We see the government going all out to reinforce our strengths as exporters, and that of the country as a major industrial and service-oriented nation poised for spectacular growth within this decade.

M Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO)