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To push economic growth, the Centre is giving shape to a plan to promote exports. Sector-specific solutions are being worked out for goods, which are yet to show any signs of recovery, despite overall increase in exports in the recent months.
Officials said a major tax restructuring was not possible but some new items might be added to various export promotion plans — focused market scheme (FMS) and focus product scheme (FPS). Categories such as rice, tobacco, cashew, marine, leather, cotton, yarn, garments, chemicals, engineering and petroleum products have shown improvement in the recent months, but exports in segments such as tea, coffee, spices, iron ore, pharmaceuticals, electronics, gems and jewellery are yet to pick up.
“Sector-specific solutions are needed. Relief can be provided under FMS and FPS, which offer duty credit scrips. Exports of a particular product or to a particular market will get relief under this,” a finance ministry official, who did not wish to be identified, told Business Standard.
The government keeps on expanding these lists from time to time. Six more items, might be added to the list. Drawback rates might also be revised for a few sectors. Automobiles and liquor are among the key sectors asking for a revision in the rates. The term of the drawback committee, headed by Planning Commission Member Saumitra Chaudhuri, has been extended by three months till December to look into the demands of exporters and suggest a revision in the rates wherever required.
“Some representations came to us that drawback rates were low. We are ready to provide higher rates if they can support it with data,” a finance ministry official said. Before this, in 2011, the term of the committee was extended to reconsider rates. Though the chances of a major revision are minimal, the government might still have to take exemption from the Election Commission, as the model code of conduct could be in place around that time. The drawback schedule came into effect from September 21 but officials said changes could be made retrospectively, if a decision to revise the rates was taken towards the year-end.
Officials said there is a plan to push exports from micro, small and medium enterprises (MSMEs) to address CAD problem, as these comprise a substantial chunk of exports.
The commerce ministry has also written to the finance ministry to act on some of the recommendations of the Gujral committee on boosting exports from MSME. The inter-ministerial panel had recommended an additional interest subvention of two per cent for those exporters who repay on a timely basis, enhancement of budget and scope under export promotion schemes, and increase in capital investment limits in the definition of MSMEs, among others.
ROAD AHEAD
* Sector-specific measures to be taken for encouraging exports
* Drawback rates may be revised upwards for a few sectors
* Action may be taken on Gujral panel report’s recommendations to boost exports
* MSME to be the focus areas as it comprises 50% of exports
