Duty fillip to tackle trade hurdles

OUR SPECIAL CORRESPONDENT

New Delhi, April 18: The government today announced a slew of incentives to boost exports that contracted 1.76 per cent to $300 billion in 2012-13. Under the annual supplement to the Foreign Trade Policy (FTP) announced by commerce minister Anand Sharma here today, the EPCG scheme has been extended to all sectors and more products and destinations have been included in the Focus Product and Focus Market schemes. The Export Promotion Capital Goods (EPCG) scheme, which allows exporters to import capital goods at zero duty, will be extended beyond March. All sectors can now enjoy the benefits of the scheme. Besides, the 3 per cent duty EPCG scheme has been clubbed with the zero-duty one. Also, "an exporter who has obtained benefits under the Technology Upgradation Fund (TUF) scheme will be eligible for benefits of the zero-duty EPCG scheme. This, I hope, will provide a push to our labour-intensive textile industry," Sharma said. The government has also decided to widen the 2 per cent interest subvention scheme to include items from engineering and textiles. These sectors will get the benefit till March 2014. At present, the interest subsidy was available to specific sectors such as handloom, handicrafts, carpets, processed agricultural products and readymade garments. While engineering, electronics, chemicals, pharma and textile items have been included in the Focus Product Scheme, Norway has been added under the Focus Market Scheme, taking the total number of markets to 125. Venezuela has been added in the Special Focus Market Scheme, taking the total number of countries to 50. A. Sakthivel, chairman of the Apparel Export Promotion Council, said, "Measure such as expansion of zero-duty EPCG scheme, extension of TUF benefits to EPCG, widening the ambit of focus market and product schemes and extension of interest subvention till March 2014 will help to promote garment exports." Rafeeque Ahmed, president of the Federation of Indian Export Organisations, however, said, "It was a routine policy. It has no bold or big-ticket announcements. There is a need for making foreign currency loan available to medium, small and micro enterprises." In 2012-13, exports to Asia, Africa and Latin America touched $195.27 billion, accounting for 65 per cent of the total exports. "This is indeed a development with significant import as South-South trade is assuming a new dynamics. Apart from this, value-added exports have got a centrality in our export basket as engineering exports accounted for $57 billion, textiles $26 billion and pharmaceuticals $15 billion," Ahmed added. Mixed numbers The trade policy announcement comes in the backdrop of exports contracting in 2012-13 even as shipments were up for the third straight month in March, offering some relief to the current account deficit. Exports rose 6.97 per cent year-on-year in March to $30.84 billion, while imports fell 2.87 per cent to $41.16 billion. Commerce secretary S.R. Rao said exports "have picked up slightly compared with the previous two months. We do expect this trend to continue and we would like to consolidate". Rao said trade deficit had come down slightly "which is good news. Given a very weak performance for major part of the year, I think in the last 3-4 months, we really covered a good deal of ground which is not sufficient but certainly there is progress in exports". The government, which did not set any export target for 2013-14, hoped that the measures would boost exports and reduce the trade imbalance. "We are conscious about the need to enhance exports so that we can address the real challenge of bringing down the trade deficit, which directly impacts the current account deficit," Anand Sharma said. The government had fixed an export target of $360 billion for 2012-13, which was missed by a wide margin. The export fall in 2012-13 had pushed up trade deficit to $190.91 billion during the fiscal from $183.4 billion in the previous financial year. S. Gopalakrishnan, president of CII, said "The resilient spirit displayed by the Indian industry has helped India attain $300 billion in exports, especially in these tough times. But the matter of concern is that trade deficit, which necessitates greater import containment and export facilitation."