The government today allowed duty-free import of capital goods, extended the duty refund scheme for exporters, and cut transaction costs for them in a bid to reverse the decline in exports and double outbound sales of goods and services in five years.
Announcing the foreign trade policy for 2009-14 in New Delhi, Commerce and Industry Minister Anand Sharma said he expected exports to reach $200 billion in the financial year ending March 2011.
Exports were worth $168.7 billion in 2008-09, but have been falling in annual terms since October as the recession in developed nations has sapped demand. They were down 31.3 per cent in the quarter ended June 30 from a year earlier, a sharp contrast from the annual growth of more than 20 per cent between 2004-05 and 2007-08.
| TRADE-OFFS FOR GROWTH (Highlights of the trade policy) |
| * Export growth targeted to increase 15% annually till March 2011, thereafter 25% |
| * DEPB scheme to continue till December 2010 |
| * EPCG scheme at zero duty and export obligation relaxed to 50% |
| * 26 new markets added for incentives under Focus Market Scheme |
The new policy shifts focus to 26 new countries to counter the demand slump in traditional markets. About 36 per cent of India's exports in 2008-09 were to Europe, 18 per cent to the US and 16 per cent to Japan.
“We have taken a conscious view to expand and diversify our export markets, especially in the emerging markets of Africa, Latin America, Oceania and the CIS countries,” Sharma said.
The new policy assures stability and continuity of the existing schemes, at least for the next two years. The government's focus will be on export sectors with high employment.
The introduction of zero-duty import of capital goods, under the Export Promotion Capital Goods Scheme, sent a wave of cheer among exporters, as this will enable them to modernise their manufacturing. The Duty Entitlement Passbook scheme, which neutralises the incidence of Customs duty on the import content of export products, has been extended by a year to December 2010.
The new policy exempts exporters from paying fees for availing incentives under export development schemes. The Export Credit Guarantee Corporation Scheme, which provides credit risk insurance cover to exporters, will continue at least till March 31 next year.
“We would like to achieve annual export growth of 15 per cent over 2010-11 with an annual export target of $200 billion by March 2011,” Sharma said. “In the remaining three years of this foreign trade policy up to 2014, the country should be able to come back on the high export growth path of around 25 per cent per annum.”
Relief measures include providing dollar credit to exporters that will be overseen by a committee consisting of the finance secretary, commerce secretary and the chairman of Indian Banks Association. To protect small and medium exporters, who are unable to seek expensive legal help for foreign markets, a Directorate of Trade Remedy Measures will be set up.
