Foreign Trade Policy Supplement, Annual Supplement to FTP 2004 – 09

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Indian commerce minister, Kamal Nath has proposed new trade initiatives and has continued with the thrust on exports in his Annual Supplement to Foreign Trade Policy 2004-09.

 

HIGHLIGHTS OF THE FTP ANNUAL SUPPLEMENT ARE AS UNDER:


Indian commerce minister, Kamal Nath has proposed new trade initiatives and has continued with the thrust on exports in his Annual Supplement to Foreign Trade Policy 2004-09.

 

HIGHLIGHTS OF THE FTP ANNUAL SUPPLEMENT ARE AS UNDER:

  • Exports zoom to record high of $ 80 billion in 2004-05 with highest ever growth rate – India on way to doubling her share in world trade ahead of target date
  • Measures to enhance competitiveness of India’s manufacturing sector and employment generation
  • Big thrust on agri exports — removal of export cess on agri and plantation commodities proposed
  • Additional EPCG benefits for agriculture and SSIs – EPCG for retail sector operationalised
  • New initiatives on infrastructure to reduce congestion at major ports – EPCG extended to minor ports, ICDs and CFs
  • Big leap towards procedural simplification and cutting transaction costs – ‘Ayaat niryat’ single common application form introduced
  • Imports under ‘served from India’ scheme to allow bulk sourcing
  • Marine sector gets special attention in the wake of tsunami
  • DEPB to continue – replacement scheme under finalisation
  • Setting up of inter-state trade council proposed

SUMMARY OF FTP ANNUAL SUPPLEMENT

Kamal Nath, has unveiled a series of new trade initiatives to put the country’s exports on a higher growth trajectory and to generate more employment through the foreign trade sector, even as India’s exports in the very first year of the comprehensive Foreign Trade Policy announced by him last year touched a record high of US $ 80 billion showing the highest ever export growth rate of 24% (in US dollar terms) surpassing the target set for the year.

Announcing the Annual Supplement 2005 to the five-year Foreign Trade Policy at a press conference in New Delhi, Nath said that the growth rate achieved in 2004-05 had been unprecedented and if this momentum was maintained, India would cross the milestone $ 150 billion of merchandise exports substantially and thereby, double her share of world merchandise trade earlier than the target date of 2009.

The Annual Supplement, while carrying forward the agenda set out in the Foreign Trade Policy announced last year – of doubling India’s percentage share of global merchandise trade within five years and providing thrust to employment generation – focuses on making manufacturing sector more competitive through concrete policy measures so as to help Indian companies become globally competitive and simultaneously, give Indian consumers world-class products and services; provides packages for several sectors including agriculture, marine products, export oriented units and service sectors; contains major procedural simplification initiatives to reduce transaction costs; and proposes setting up of an Inter State Trade Council to engage state governments more actively in export effort. “While India’s international trade will continue to function under the overall framework of the Foreign Trade Policy announced last August (and which has proved so hugely successful), some fine-tuning needed to be done to take into account the changing international trade dynamics. This is the genesis of the Annual Supplement. It is not a ‘new policy’ that I am announcing today, but something to supplement the existing policy” by incorporating additional policy initiatives to facilitate and enhance India’s external trade, the Minister said.

Maintaining a consistent stand that taxes and duties should not be exported as they erode the competitiveness of India’s agricultural exports, the commerce minister proposed to abolish cess on export of all agricultural and plantation commodities levied under the various Commodity Board Act.

In a further boost to agri exports, the Minister announced that benefits under the ‘Vishesh Krishi Upaj Yojana’ would also be extended to poultry and dairy products in addition to export of flowers, fruits, vegetables, minor forest produce and their value added products.

He also announced a number of concrete measures to enhance competitiveness of the manufacturing sector in India. Salient amongst these are:

  • No safeguard and antidumping duty to be levied on inputs under advance licence for deemed export supplies made to International Competitive Bidding (ICB) projects.
  • To promote accelerated export performance, balance export obligation will be waived for the exporters completing 75% of their export obligation in half the prescribed export obligation period under the EPCG scheme.
  • Reduced export obligation and enhanced time available for exports under the Export Promotion Capital Goods (EPCG) Scheme for the imports made by the agriculture sector.
  • Reduced obligation at six times the duty saved amount as against the normal eight times for imports made by the SSI sectors under the EPCG Scheme.

Further, to facilitate modernisation of the retail sector in India, Nath announced that concessional duty benefits under the EPCG Scheme would be extended for import of capital goods required by retailers having a minimum covered shopping area of 1000 square meters.

Addressing the problem of port congestion that had frequently hampered exports, he announced a new initiative aimed at reducing congestion at the major ports. Thus, the facility for export obligation discharged in rupee payment under the EPCG has been extended to the minor ports, ICDs (Inland Container Depots) and CFS (Container Freight Stations) also.

“Marine products constitute an important element in our export basket. The tsunami tragedy has wrought havoc on our eastern coastline. Fishermen and their families have suffered greatly, and the long term benefits on coastal marine productivity are yet to be realised. We have therefore prepared a special package for the marine sector”, Nath said. The package allows duty free import of specified inputs based on the past export performance, import of mono filament long line system for tuna fishing at concessional duty and establishes a self removal procedure for clearance of perishable waste.

Gems & Jewellery sector has not been left behind and the enhanced entitlement of Rs.3 lakh ( Rs 0.3 million) of duty free imports of samples is being allowed. It also allows the nominated agencies release of gold of 0.995 and above purity for export purposes.

Under a Special Package for the Export Oriented Units (EOU) sector, a simplified procedure is being put in place for units debonding from EOUs. Similarly, capital goods can now be transferred to other units by simply intimating Central Excise & Development Commissioner. EOUs can also claim IT exemption within a period of 12 months from the date of exports.

In a major leap towards paperless trading, Nath has announced a series of initiatives in the direction of moving towards reduced paper transactions through procedural simplifications. A single common application form called “Aayaat Niryat Form” is being introduced, reducing the documentation requirements by more than 60%. Further, three categories of advance licences are being merged into a single category and annual advance licence, which was available only to status holders, will now be available to all exporters with some export performance.

In the area of service exports, to enable service providers to upgrade infrastructure in their associate companies, goods imported under the “Served from India” Scheme will be transferable within the group companies and managed hotels. This provision would allow bulk sourcing and better utilization of the entitlement.

In order to develop niche market with distinct identity for quality products, Indian commerce minister said that the Government would develop a trademark for Handloom also on lines similar to ‘Woolmark’ and ‘Silkmark’.

To promote export of ‘Minor Forest Produce’ products Shellac Export Promotion Council has been designated as a nodal EPC for minor forest produce.

All Export Promotion Council (EPCs) shall open a separate Cell to involve and encourage youth and women entrepreneurs in the export effort.

The Duty Entitlement Pass Book (DEPB) Scheme will continue till the replacement scheme is put in place. The replacement Scheme is currently under finalisation and inter-ministerial consultations are currently on towards finalisation of the new scheme. Meanwhile, Department of Revenue, Ministry of Finance, have already notified rollover of DEPB for the next six months, i.e., till September 2005.

The Target Plus Scheme aimed at rewarding incremental exports would continue in the year 2005-06 with such modifications as will be notified, separately for preventing misuse, if any.

In order to engage the States in providing an enabling environment for boosting India’s exports, Kamal Nath has also proposed the setting up of an Inter State Trade Council. “Coherence and consistency among trade and economic policies of both the union and state governments is important for maximising the contribution of such policies to development…. It is hoped that the Council would provide an appropriate institutional dialogue mechanism on this important subject”, he said.

Source : Press Information Bureau of India

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