The Hindu Business Line : Import of capital goods at concessional rate

THE incentives provided to the domestic retail segment in the form of permitting it to import capital goods at concessional rate of duty is primarily designed to give it a chance to modernise itself, said the Union Minister of Commerce and Industry, Mr Kamal Nath, on Friday.

Talking to Business Line in his Udyog Bhawan office here, soon after announcing the annual supplement to the Foreign Trade Policy (FTP), Mr Kamal Nath was explaining the rationale behind the concession to domestic retail segment.

Following the furore created by his earlier comment that foreign direct investment (FDI) in single product branded retailing would be considered by the Government, the Minister was a bit cautious in insisting that the sops given were only to the domestic retailing industry to enable it to grow tech-savvy to help them raise swanky and glitzy malls.

He said that the country's retail segment is growing at 24 per cent and "why should we not see that the domestic retail has modern facilities, modern equipment and accounting methods. Why should not India become a shopping hub? Why should people go to Thailand, Malaysia and Singapore for shopping?"

When his attention was drawn to the resistance put up by the trading community backed by political parties for opening up of the retail sector, the Minister quipped that "there is no political motive and we will see that our moves does not rock the boat".

To a specific query as to why the ritual of annual policy statement when the five-year framework of the policy has laid the roadmap, he said that the "policy needs to be dynamic and not static and every year one need to be strategising, supplementing and modifying certain things" to capture changes taking place across the world.

He said, "periodical reviews and strategic realignments is necessary in response to the changing circumstances" internationally.

On the replacement to the duty entitlement passbook scheme (DEPB), which gives duty neutralisation on imported inputs used in export production, the Minister said the proposed scheme proceeds on the premise that taxes should not be exported.

"The new scheme will obliquely have one-time remission of all duties/levies in a scientific manner and for value added products so that there is a level playing field to domestic exporters".

He said the Prime Minister's intervention to keep in abeyance the recovery process of taxes on income derived from the sale/transfer of DEPB only bears out the Government's commitment to help exporters.

He said the Prime Minister does not "obviously go with the Finance Ministry" on this issue.

Asked about the feasibility of achieving $92 billion export target set for the current fiscal, the Minister said based on the last fiscal year performance of the country's exports, the export target is realistic.

On the prospects of India-China bilateral economic and commercial relations in the light of the forthcoming visit of the Chinese Premier, Mr Wen Jiabao, to India beginning from Monday, the Minister said that "we have to engage with all the neighbours and with China too we have to look and identify the products and using each other's strength, leverage upon it".

He said that as China starts moving to the market economy, they will begin feeling the "pains and strains of pricing etc. and this is the time to engage with them".

While ruling out a free trade area (FTA) pact with China immediately, the Minister said that "we should examine how we marry our individual strength" to mutual benefit through cooperation in a wide range of areas.

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