The Hindu Business Line : `Exim policy to give thrust to job creation'

THE key thrust areas of the forthcoming Exim Policy, to be announced by Union minister of Commerce, Mr Kamal Nath, will focus on employment generation and a cut in transaction costs for exporters.

Delivering the keynote address at an Open House on Exim Policy and other issues here on Friday, organised by the regional office of the Export Promotion Council for EOUs and SEZ Units (EPCES), Mr G.K. Pillai, Additional Secretary, Ministry of Commerce, said special attention in the policy would be given to manpower intensive sectors like gems & jewellery, textiles, leather and value added products, handlooms and agri food-processing.

In the context of the much-needed cut in transaction costs for exporters, mainly through elimination of procedural delays, Mr Pillai said the plan was to minimise the interface between exporters and the Government.

Calling for special efforts from EPCs towards stronger Centre-State partnership in export promotion, he said the objective was to touch exports of $150 billion by 2010. He said if necessary the Central grant of Rs 425 crore for States (in export promotion) under the ASIDE (Assistance for State in Export Development) Scheme may even be raised, as exports have the potential to generate more jobs.

Seeking removal of the sunset clause of 2010, under section 10B of the Income-Tax Act for Export Oriented Units (EOUs) in the forthcoming policy, Mr Sharad Jaipuria, Chairman of EPCES, said this was acting as a major deterrent for fresh investments in the sector. The I-T exemption is available only till 2009. If exports have to grow, and EOUs have to grow in size, be competitive and achieve economies of scale in operations, huge investments are required by this sector, he pointed out. Mr Jaipuria said a promoter would make investments at this stage only if he continues to get tax exemption, and for this, the anomaly of sunset clause of 2010 has to be removed from the Act.

He clarified that if any DTA unit now wants to get converted into an EOU, it does not get the I-T benefit. He felt that if the scheme is suitably modified and the sunset clause removed without any further delay, a large number of DTA units may want to get converted into EOUs, benefiting Indian exports in a big way.

He informed the gathering that the Commerce Minister has responded favourably to the council's suggestions, especially with regard to the discrimination EOUs are being subjected to now with regard to CST exemptions, sales tax, service tax etc. He said an assurance has been given that a package would be worked out both in the Exim policy and the Union Budget.

According to Mr Pradeep Kumar Chopra, Regional Chairman of EPCES, another major issue being taken up by the Council was that DTA sale from EOUs should be allowed, based on the principle of duty foregone on imported inputs. He said this was WTO compatible, and adopted worldwide. Duty foregone can be calculated on the basis of SION (Standard Input Output Norms), on a self-declaration basis, it is pointed out. Mr Chopra said where raw materials are procured through domestic sources, DTA sale may be allowed on payment of a normal excise duty, for both EOUs and SEZ units.

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