The Hindu Business Line : `Free warehousing zones to make India a trading hub'

The Free Trade and Warehousing Zones proposed in the Foreign Trade Policy would make India a veritable trading hub after Dubai which had emerged as the world's biggest warehousing/trading centre, the Union Commerce and Industry Minister, Mr Kamal Nath, said today.

Talking to Business Line here at his office in Udyog Bhawan, Mr Kamal Nath said that the Government plans to rope in 10 to 15 entrepreneurs to join in this new venture likely to be established in Mumbai, Gujarat coast and Southern coast to start with.

He said that since 100 per cent foreign direct investment (FDI) would be permitted in the development and establishment of the zones and their infrastructural facilities, positive response might start flowing to this proposal.

He said upgrading the country's infrastructure network, both physical and virtual, related to the entire foreign trade chain to global standards was the main motive force for this new proposal.

Asked about the thrust of his first foreign trade policy, the Minister said that he has put in efforts to "incentivise" exporters by announcing a slew of promotional schemes for export production with specific employment potentials, besides pruning down the transaction cost to trade and industry by doing away with bank guarantees and other paperwork including frequent interface with the mandarins of his Ministry.

When asked whether this meant reduced role for the Directorate General of Foreign Trade (DGFT), the Minister quipped: "DGFT will have a role - not of control but one of partnership with business and industry".

In reply to a question about the multiplicity of export promotion councils and the additional one for services industry, the Minister justified this stating that the proposed Service Export Promotion Council is for non-information technology (IT) industries such as health service, architecture, financial services or tourism.

He said that a task force has been set up to immediately identify services industries, which should form part of this new export promotion council.

The Minister said that while exporters have been exempt from services tax for both goods and services, the next task for him is to convince the State governments about several taxes the exporters are faced with including sales tax and octroi, which need to be ended.

He said that the philosophy behind his first foreign trade policy could be summed up thus: "We are looking at exports as an engine of growth, growth being an incremental economic activity and that is what the policy is all about".

As the Government is keen on pushing the country's share in the global trade from the current 0.7 per cent to 1.5 per cent by 2009 which in value and in dollar terms amount to $173 billion, the focus is on both manufactured exports and trading sector and that is why the free trade warehousing zone proposal was brought in.

He further said that as infrastructure remains the weak link for pushing exports, the Government has constituted a high-level committee to go into the infrastructure problems. Proposals like warehousing zones, which foresee creation of world-class infrastructure for warehousing of various products, would be a step in this direction.

He said that one of the policy objectives is to facilitate technological and infrastructure upgradation of all the sectors of the Indian economy, especially through import of capital goods and equipment, thereby enhancing value addition and productivity, while attaining internationally accepted standards of quality.

As exporters feel that their margins get eroded because of the gyrations of the exchange rate, the Minister said, "we can't say that what should be the dynamics of the rupee. It has to be market-driven. Government is not going to try and fix the rupee to help exports."

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`Free warehousing zones to make India a trading hub'