The Hindu Business Line : Facilitation of exports will be the prime focus: DGFT

THE Foreign Trade Policy (2004-09) aims at augmenting the country's exports of both goods and services in order to ensure employment opportunities with export facilitation being the focus of the policy, the Director General of Foreign Trade (DGFT), Mr Gopal K. Pillai, said on Tuesday.

In an interview to Business Line here at his office soon after the policy was announced, Mr Pillai said, "a lot of hard work needs to be done in improving infrastructure and reducing transaction cost to exporters".

He said the new scheme of free trade and warehousing zones proposes creation of world class infrastructure for warehousing of various products, latest equipment, transportation and handling facilities, commercial office space, water, power, communication and connectivity with one-stop clearance of import and export formality, to bolster the integrated zones as international trading hubs. These zones would be established in areas proximate to seaports, airports or dry ports so as to offer easy access by rail and air.

He said initially the Government is confident of roping in at least 10 to 20 parties to develop these zones which would help exporters in India to source their imported inputs or spare parts ranging from big machinery to small parts from these warehouses at competitive rates and flexibly.

These zones would be catering to traders of neighbouring countries too, as they would be supplying their stocks on demand as they are given the leeway to carry out trade transactions in free currency.

Asked about the exemption of service tax to exporters provided in the new policy, Mr Pillai said that the next step would be to exempt them from central sales tax (CST), though they are getting refund on that. As CST proceeds go to the States, the idea of exempting this would not be fair as in any case in six-months' time the CST would get abolished with the advent of value-added tax (VAT).

When his attention was drawn to the reduction in the cost of developing towns of excellence from Rs 1,000 crore to Rs 250 crore as proposed in the policy, Mr Pillai said that this amount is sufficient for improving the amenities in a town engaged exclusively in exports such as knitwear in Tirupur or other export item.

Between the State Government and the Central Government, Rs 600 crore was spent on developing infrastructure in Tirupur, which could boast of effluent treatment and better quality of life. So by reducing the cost of developing township, more entrepreneurs and the State governments with Central assistance could come forward to identify towns of export excellence and improve the facilities there, he said.

In response to a query on diffusing the status holder categorisation of exporters, Mr Pillai said the idea is to rope in a large number of small and medium exporters into this league so that they could get all the benefits conferred on status holder such as RBI gold card and access to cheaper credit. The nationalised banks disburse only 7.7 per cent of export credit against the target of 12 per cent of their total lending and this would help in bringing more exporters to benefit.

Mr Pillai said that by means of procedural simplification, the validity of advance licence has been raised from 18 to 24 months, as also the validity of transferable licence/certificate/permission such as DEPB (duty entitlement passbook) and DFRC (duty free replenishment certificate) from 12 to 24 months.

The validity of export promotion capital goods licence has been increased from 24 to 48 months. The objective in this exercise is to minimise the interface between exporters and the DGFT to the barest minimum.

He, however, maintained that the role of DGFT would remain relevant stating "so long as we have the Target Plus scheme and other promotion measures in place, somebody needs to keep the account".

Mr Pillai said that though the DGFT is fully automated and is servicing exporters through electronic data interchange (EDI), the customs side had put in place only recently safe script to ensure inter-connectivity in the seamless operation of export services to trade and industry.

All foreign trade transactions conducted through 33 major ports in the country would be on EDI.

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