The Hindu Business Line : Data, policy glitches to upset $100-billion export target plan

The industry was told that in case glaring errors in data feeding persist, punitive action might have to be taken or benefits might have to be denied to those exporters who continue to feed erroneous data without taking corrective measures.

New Delhi , Nov. 21

THE Union Commerce and Industry Minister, Mr Kamal Nath's recent optimistic projection that the country's merchandise exports would exceed $100 billion this fiscal is unlikely to be achieved in the face of policy inadequacies and data credibility currently dogging the Department of Commerce.

Trade and industry sources told Business Line here that at a recent mid-year review of export performance in 2005-06 chaired by Mr Kamal Nath, the foremost issue for discussion was the authenticity of export data. At the meeting with the chiefs of various Export Promotion Councils (EPCs) and Commodity Boards, there was a call for exact data on foreign trade, which constitutes the basis for policy decisions.

Errors in data: Glaring errors were found in the ITC (Harmonised System) code and the quantity figures fed in shipping bills, which form the basis of Daily Trade Returns (DTRs) and are used by the Directorate-General of Commercial Intelligence & Statistics (DGCI&S).

The sources said that many engineering items are not accounted for in the coding system, leaving a huge data gap for engineering exports, while the discrepancy between DGCI&S and EPC data is $2 billion in the case of gems and jewellery exports. Though the DGCI&S does not approve of a parallel system of data collection through EPCs to avoid wide divergences in data, it favours a joint bid by the officials of DGCI&S and EPCs to study and solve the data problems. The industry was told that in case glaring errors in data feeding persist, punitive action might have to be taken or benefits might have to be denied to those exporters who continue to feed erroneous data without taking corrective measures.

Policy support: Apart from bolstering data credibility, EPCs sought from the Government a raft of actions on promises made earlier or initiatives already launched so that exporters would be reassured of policy support. They said that rules under Special Economic Zones (SEZ) Act should be notified without loss of time. The Sunset clause for the Income-Tax Act Section 10B should be removed so that 100 per cent EOUs continue to enjoy tax exemption benefits.

A special cell has been sought to deal with the problems of exporters and importers. Exporters also favoured a review of capital and interest subsidy for exports and demanded 100 per cent grant extended under market development assistance for accessing new markets.

While exporters called for a fixed timeframe for remission under the export promotion capital goods (EPCG) scheme, some insisted on an end to the harassment of small firms employing less than 10 persons for provident fund and ESI contribution. Exporters said that there was a gap between the ending of the previous DEPB (Duty Entitlement Passbook) scheme and the issue of a fresh notification on the scheme from October 3, 2005. The gap of three days in the dates of the two notifications has led to cash flow problem for exporters, for which DGFT and the Revenue Department should step in for early action, the sources said.

Exporters also sought a time frame to be worked out by the Revenue Department for reimbursements under the duty drawback scheme so that they can easily realise their legitimate dues, which come after inordinate delay.

Regional trade arrangements: As for the spate of regional trading arrangements India has been signing, which include free trade areas, some of the export-sensitive industries have been troubled by the trade preferences exchanged.

Hence, they felt that the Department of Commerce should set up a Committee with representatives of RTA-sensitive EPCs to take into account their suggestions while negotiating future RTAs so that third country imports do not piggyback on the preferential route to damage the competitive advantages of the domestic manufacturer-exporters, the sources said.

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