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The Minister for Commerce and Industry, Mr Arun Jaitley, with the Direcor General of Foreign Trade, Mr L. Mansingh, at an interactive session on the Exim policy and procedures in the Capital on Wednesday. --Ramesh Sharma

New Delhi , Dec. 24

THE Union Commerce and Industry Minister, Mr Arun Jaitley on Wednesday said that the hardening of the rupee vis-à-vis the United States dollar in which most of the Indian exports are denominated should not be seen as a hurdle for pushing up exports as the exporters could instead take this as a challenge to cut down costs and improve operational efficiency.

Addressing an interactive session on Exim Policy and Procedure, organised by the Federation of Indian Export Organisation (FIEO) here in the run-up to the forthcoming policy modifications of the Exim Policy to be announced on March 31, 2004, the Minister conceded that last year was a challenging year for exporters. This was because of the hardening of rupee vis-à-vis US dollar which had obviously made "our products costlier and costlier products are always difficult to sell in the global market." However, these are the dynamics of the free market "and we have to learn to live with it," he added.

He said that even though the Exim policy was for a span of five years, "we can look at areas where we can push our exports." He said that for instance in the service sector, the level of infrastructure was not the factor as it was for manufactured exports because one of the factors for services sector export boom was human resources. Mr Jatiley said that last year exports grew by 19 per cent in dollar terms and "we consciously set the export target for the current fiscal at 12 per cent" because of the challenges of the international trading scenario.

Mr Jaitley noted that there were several positive factors in the economy such as good growth in agriculture, manufacturing and comfortable foreign exchange reserves and there is a resurgence of the economy. He said, "India brand must ride on the world market, given the changing image of India."

Responding to the suggestions by exporters for restoring full 80 HHC benefits (tax break on export profits), the Minister said that he had already written to the Finance Minister, Mr Jaswant Singh who is also concerned about it. In reply to another question from FIEO member, the Minister said that exempting export unit from the purview of labour laws is being given due thought as a Group of Ministers (GoM) is working on framing suitable amendment to the labour laws.

In his presentation, the FIEO President, Mr M. Rafeeque Ahmed suggested measures to give a boost to exporting units in the domestic tariff area (DTA) by treating those units which export more than 75 per cent of their production at par with 100 per cent EOUs in the matter of facilities and benefits. He further pleaded for relaxing the criterion set for grant of recognition status to exporters as even many of the extant status holders could find themselves disqualified after March 2004, as a result of the fall in their exports due to the appreciating rupee. He also sought the Government to direct Export Credit Guarantee Corporation (ECGC) to settle 100 per cent of the exporters claim instead of the current 90 per cent only. Vice President, FIEO, Mr Subhash Mittal pitched for reduction in processing fee by banks and also withdrawal or lowering of State levies on exports.

The DGFT, Mr L. Mansingh explained that while there was not much scope for further liberalising Exim norms, the process of simplification of procedures would be carried forward. The effort now, he said, would be to optimise export facilitation for the bulk of exporters so as to effect a tangible reduction in transaction cost. He said the modifications to the policy to be announced next year would offer a green channel for all exporters abiding by the rules. The weighted average duty rate, he said, was coming down every year and as such further reduction in transaction cost was a certainty. He pointed out that the Government's role had now shifted from "micro management to facilitation at the macro level."

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