Wednesday, June 6, 2012

Foreign Trade Policy for 2012-13: 7-Point Strategy To Boost Exports

Commerce and Industry Minister Anand Sharma has unveiled the Foreign Trade Policy for 2012-13 on June 5. He announced a seven-point strategy to boost exports which include extension of interest subsidy scheme by one year until March 31, 2013. The policy is based on a seven-point strategy which includes thrust to employment intensive industry, encourage domestic manufacturing for inputs to export industry and reduce the dependence on imports, promote technological upgradation of exports, persist with a strong market diversification strategy, encourage exports from the northeastern region, incentives for manufacturing of green goods and reduce transaction costs.

The policy continued with most of the export tax sops and increased the ambit of some others to help exporters rack up $360 billion in exports in the current fiscal. It is indeed a difficult task to present a policy which aims for rapid growth in exports in the face of weak global demand and the unabated persistence of the global economic crisis which erupted four years ago.

Market Diversification
The seven-pillars to boost exports, Sharma said, would also include efforts to increase exports from the north-east region and provide incentive for manufacturing of green goods.

In addition, there would "endeavor to reduce transaction cost through procedural simplification and reduction of human interface. Efforts would be made to promote technological upgradation of exports to retain a competitive edge in global markets and encourage domestic manufacturing for inputs to export industry, thus reducing dependence on imports. The zero-duty Export Promotion Credit Guarantee (EPCG) scheme would be extended by an year to March 31, 2013.

On market diversification, market-linked focus product scheme has been extended until the end of the current fiscal 2012-13 for exports to the United States and European Union (EU), in respect of apparel sector.

Special Economic Zones
As regards the Special Economic Zones (SEZs), he said, "we will come out with new guidelines to make the operation of the SEZ policy more buoyant." In addition, the minister said the government would revamp the 100 per cent Export Oriented Unit (EOU) scheme in the next few months.

The benefits under the scheme, he said, would also be available to those units which had taken benefits under the Technology Upgradation Fund Scheme (TUFS).

The EPCG scheme will also be available for those who had surrendered their benefits under the Status Holder Incentive Scrip (SHIS) scheme.

The government will come out with new guidelines to revive export hubs, SEZs which have lost their sheen after the imposition of the minimum alternate tax and a proposal to take away tax incentives. The government accepted the key demand of industry to extend the two per cent interest subsidy until March 2013.

India’s Exports
India’s exports grew by 21 per cent in 2011-12 to touch $303 billion. The country’s exports inched up 3.23 percent to $24.5 billion in April from a year earlier after falling in March, a far cry from the more than 20 percent growth recorded in recent years. India has been hit by falling demand from its traditional export markets in the United States and Europe.

The export figures compounded an already gloomy economic picture — Gross Domestic Product (GDP) data showed the economy grew at its slowest pace in nine years in the first three months of 2012.

Salient Features
* Foreign Trade Policy document made more user friendly
* Incentives for exports from north-eastern states
* The government to come out with new guidelines to promote SEZs
* The government aiming 20 per cent export growth in 2012-13
* Two per cent interest subsidy scheme extended until March 2013
* Seven new markets added to Focus Market Scheme
* Single revolving bank guarantee for different export deals
* Focus on market diversification to continue
* Steps announced to reduce transaction cost of exports
* Market linked focus product scheme extended until March 2013 for apparel export to the United States and EU
* Ahmedabad, Kolhapur, and Shaharanpur new Towns of Export Excellence
* Zero per cent duty EPCG scheme for technology upgradation extended until March 2013
* Shipments from Delhi, Mumbai through post, courier or e-commerce to get export benefits

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