The Hindu Business Line : On the right track to double trade, create employment

THE supplement to the Foreign Trade Policy announced by the Commerce and Industry Minister demonstrates that the twin objectives of doubling our share of merchandise trade and to provide additional employment opportunities are on the right track.

The exports during 2004-05 have increased by 24 per cent, against the target of 16 per cent. This has encouraged the Minister to revise the export target for 2005-06 from $88 billion to $92 billion.

The additional exports during 2004-05 have also provided an incremental direct employment to 1 million.

However, the figures suggest that exports have not done well during February and Mach 2005 as overall export growth has slipped from 27 per cent to 24 per cent.

I am particularly happy with the announcement of formation of inter-State trade council.

With the removal of quantitative restriction and reduction of Customs duty, the focus of manufacturing activity has shifted to States.

States not only impose taxes and levies on the inputs used in export production but also hold the key to labour reform. Certain key infrastructure such as power and road also fall in their purview.

The formation of the council will help coherency and consistency in the trade and other economic policies of both the Union and the State Governments.

Package given to the agricultural sector, including removal of export cess on agriculture commodities, reduction in export obligation from 8 times to 6 times for such units under EPCG scheme and reduction in quantum of bank guarantee from 25 per cent to 15 per cent for units in AEZs will facilitate agriculture exports.

Concessional duty import of mono-filament long line system for tuna fishing and 1 per cent duty-free entitlement for import of special flavouring and ingredients for seafood processing would definitely help the marine sector which has been hit by imposition of anti-dumping duty in the US and tsunami.

India is a major player in the gem and jewellery sector. We need to import samples of jewellery for enhancing our craftsmanship and to align with fashion trend abroad.

The increase in duty-free import of gem and jewellery samples from Rs 1 lakh to Rs 3 lakh would facilitate such imports. The import of gold jewellery of 18 carat and below would provide a major boost to such studded jewellery.

The relaxation in fulfilment of export obligation under EPCG for minor ports, including ICD and CFS would help to modernise port operations, while simultaneously addressing the issue of congestion at major gateway ports.

If we have to achieve our export target, port capacities need to be augmented from present level of about 500 mt to 1,000 mt by 2009.

I am sure that success of private ports in Gujarat will provide the impetus to entrepreneurs to develop more such ports to meet the demands.

However, I am perturbed at the delay in announcing the reimbursement of cost disability factors.

A study conducted by FIEO suggest that cost disability of Indian exports ranges between 19 per cent and 22 per cent whereas our competitors have a disability ranging from 3-3.5 per cent.

A committee set up by the Department of Commerce has accepted this fact but no announcement to this effect has been made.

I was hoping that the Foreign Trade Policy would supplement the announcement made in the Union Budget for promoting textiles sector, including reduction in duty on textile machinery, augmentation of technology upgradation fund,10 per cent capital subsidy scheme for processing sector and optional Cenvat facility for the textile industry.

However, the Commerce Minister has disappointed the textile exporters.

(The author is President of the Federation of Indian Export Organisations.)

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