Schemes enhance agro processing, high-tech

2007 Supplement to Foreign Trade Policy 2004-09

The third annual review of the Foreign Trade Policy 2004-09 saw the introduction of two export promotion schemes incentivising hi-tech exports as well as agro processing. The review also increased the scope of existing export promotion schemes, focussing on employment generating sectors like agriculture and small scale industries.

The new scheme on hi-tech exports, details of which are being worked out, gives a duty credit of 10 per cent on incremental export growth to the exporter. "The details of the products would be notified in consultation with various ministries within 30 days. The notification of the new policy will be done in the next 60 days," said Commerce Minister Kamal Nath.

In order to give incentives to the agro processing sector, a new export promotion scheme has been unveiled, under which duty credit equal to 10 per cent of the value of agricultural exports will be provided for duty redemption on imports of cold storage, pack houses and refer vans. "This would be over and above the benefits given by the ministries of agriculture and food processing," said Nath.

The scope of existing schemes like the Focus Market, Focus Product and the Vishesh Krishi and Gram Udyog Yojana has also been increased. The total allocation for the focus market and focus product has been increased to Rs 1,000 crore from the existing Rs 650 crore.

In addition, new items like mica and its variety, barley, oats, soyabean, cigar/cheroots, bovine fat and copra have been included under the Focus Product Scheme, which gives a duty-free credit equivalent to 1.25 per cent of the freight on board (FOB) value of exports.

Exporters can now avail export benefits under the Focus Market Scheme to 16 new countries, which includes 10 former CIS countries. The scheme provides for a duty free scrip of 2.5 per cent of the freight on board value of exports to the notified countries.

The number of items under the Vishesh Krishi Upaj Yojana has also been increased to include items like coconut oil, potato flakes, soups and sauces. Exporters avail duty credit equivalent to 5 per cent of the freight on board value of notified items under this scheme.

Norms for availing the benefits under the Export Promotion Capital Goods (EPCG) scheme for the Handloom and handicrafts sector has been simplified, by increasing the export obligation period to 12 years from the current eight years. One will also be able to import spares and tools for existing machinery under the scheme.

In addition, the export obligation under the EPCG scheme, which was earlier based on past exports performance, will now be based on the average exports.

The Duty Entitlement Passbook Scheme (DEPB), which has been extended till March 31, 2008, will be replaced by a new scheme by next year. The commerce ministry has asked for suggestions on the new scheme by May 31 this year.

The limit for duty-free imports of samples has been increased from the current level of Rs 60,000 to Rs 75,000. Exporters will also be able to claim the reimbursement of duty on fuel as well as the 4 per cent special additional duty for 'non-cenvatable' sectors under the DEPB scheme.

Export Promotion Units, which do not avail direct tax benefits, will now be able to avail the benefits under schemes like Focus Market, Focus Product, and Vishesh Krishi and gram Udyog Yojana.