The Hindu Business Line : Target Plus scheme may be buried after March 31

Use & misuse

Target Plus was essentially to accelerate export growth, and under it, exporters achieving a quantum jump in exports were entitled to duty-free credit based on the incremental exports substantially higher than the general actual export target fixed.
Informed government sources point out that even some large houses were indulging in this business of "buying of turnover" from another exporting company to show an incremental growth of even over 100 per cent.

Kolkata , March 24

The `Target Plus' rewards scheme for exporters who achieve incremental exports may be given a quiet burial by the Commerce Ministry because of rampant misuse by the exporting community. Under any case, the scheme, announced during 2004-05, is set to end on March 31, 2006, and according to highly placed Commerce Ministry sources, it is unlikely to be extended because of the whopping revenue leakage of Rs 4,000-7,000 crore, sources point out.

Target Plus, announced in the Foreign Trade Policy of 2004-09, was essentially to accelerate export growth, and under it, exporters achieving a quantum jump in exports were entitled to duty-free credit based on the incremental exports substantially higher than the general actual export target fixed.

Rewards are based on a tiered approach. For incremental growth of over 20 per cent, 25 per cent and 100 per cent, the duty-free credits would be 5 per cent, 10 per cent and 15 per cent of f.o.b. value of incremental exports respectively.

Informed government sources point out that even some large houses were indulging in this business of "buying of turnover" from another exporting company to show an incremental growth of even over 100 per cent. It is learnt that export turnovers are bought at a premium to become eligible for the duty-free credit.

Alternative

Sources said the Union Commerce Minister, Mr Kamal Nath, had given clear indications about the non-continuance of the Target Plus scheme at the recently held board of trade meeting.

An alternative to this may be a new scheme based on new markets and new products on a matrix basis, which will also award genuine export performance.

It is likely to be announced by the Commerce Minister in the forthcoming annual FTP statement, customarily announced on March 31, 2006. Sources say the Minister may defer the announcement of the policy statement this time too by another week (likely on April 7, 2006), as he still has to tie up some loose ends.

The existing DEPB scheme will run its course for one more year, after which a new scheme may be unveiled. It is learnt that the alternative scheme would be one that will entail refund all State taxes. Sources point out that both the commerce and finance ministries have not given their okay to the proposed alternative to DEPB, and the matter has been referred to the Cabinet Committee on Economic Affairs.

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