Trade policy deferred

Finance, commerce ministries differ.

Differences between the finance and commerce ministries have led to the postponement of the annual supplement to the Foreign Trade Policy, which is usually announced on March 31. The policy announcement has been deferred by 7-10 days.

This is the second time the policy will not be announced on March 31. Last year, it was announced on August 31 because of the change of government in May and a late Budget in June.

"Nearly 70 per cent of the policy (preparation work) is complete. The remaining 30 per cent, however, deals with the contentious issues on which a decision has to be taken by Prime Minister Manmohan Singh," an official said.

Officials pointed out that the annual supplement this year was being personally monitored by the prime minister in the wake of differences between the ministries.

Commerce and Industry Minister Kamal Nath wants further measures to boost exports, including a package for automobile component exports, exemption from income tax under Section 80HHC for profits earned under the duty entitlement passbook scheme and additional concessions for farm goods exporters. On the other hand, the North Block is reluctant to dole out sops that will have revenue implications.

At a meeting last weekend between finance and commerce ministry officials, the latter had agreed to several procedural simplifications but were reluctant to extend any further duty exemption to exporters.

The Prime Minister had last week convened a meeting of Nath and Finance Minister P Chidambaram to resolve the issue of taxing exporters under the DEPB and duty drawback schemes.

Exporters are accusing tax officials of harassment on the ground that they are not treating the two schemes on a par with the advance license scheme.

Officials pointed out that while the finance ministry could be asked to issue the necessary notifications to prevent future harassment, it was not possible for them to refund the money that had been claimed from exporters.

According to the latest estimates, the duty remission on various schemes up to February this year is around Rs 32,700 crore. The total duty remission last year was Rs 41,060 crore.