The Hindu Business Line : High-level meet in May to firm up export target

Positive signals
Exports grew $63 billion last year; trade in manufacturing is extremely promising.
New policy thrust modelled on China's success should work well.
Service tax, FBT will be factored in for duty neutralisation.

MR S.N. MENON

New Delhi , April 9

The Commerce Ministry will convene a meeting of all export promotion councils and commodity boards next month to determine the firm export target for the current fiscal, even as an indicative target of $120 billion was announced at the Annual Supplement to the Foreign Trade Policy on April 7 here.

The Commerce Secretary, Mr S.N. Menon, told Business Line in an interview, "We have already started the exercise of the development of sectoral target for each sector".

He said the Department was quite optimistic of sustaining and stepping up the high export growth this fiscal too. The extension of the DEPB scheme by one year was a "very positive signal to the exporters that while we work on the new scheme, the old scheme will continue".

Mr Menon said that export performance last year was "exciting" as exports grew by $63 billion and India's trade in manufacturing was growing and is "extremely promising".

Moreover, in many sectors where there had been concerns, things are promising now. For example exports of textiles and clothing would be $17 billion in 2005-06 against $13 billion in the previous fiscal.

This was also true of other sectors such as machinery and instruments, transport equipment, machine tools and chemicals, he added.

Employment generation

Mr Menon said one of the major thrust areas in the last two years was the issue of employment generation and its linkage with exports. Citing a study by the Research & Information System (RIS) released by the Commerce Minister, Mr Kaman Nath, on April 7, Mr Menon said that on the export of $80 billion in 2004-05, the employment generation was 16 million (9 million direct and 7 million indirect).

When exports would be $160 billion in 2009-10, the incremental employment generation will be as high as 21 million between 2004-05 and 2009-10. He said such incremental employment through export strategy is "a vital part of our growth".

Focus markets

Referring to the new focus product and focus market, the Commerce Secretary the earlier schemes such as Focus Africa and Focus Commonwealth of Independent States (CIS) would continue in the final year of the Tenth Plan (2006-07). "Now what is proposed is to provide certain incentives to capture some of the markets or have a greater kind of strengths in those markets. The programme of this nature has been done by China in a consistent and very successful manner," he said.

On moves to reduce transaction cost, Mr Menon maintained that since the advent of the 2004-09 FTP, there has been a continuous effort to reduce transaction cost, simplify procedures and practices and strengthen the electronic connectivity between different agencies — Customs, banks, airports, seaports, DGFT and all others involved in the transaction of international trade.

Asked about how the unrebated service tax and fringe benefit tax (FBT) on export would be factored in the duty neutralisation schemes, Mr Menon said "We have a certain level of information already available because a detailed study was done by Assocham and as a result of that we have a clear-cut idea of what is the percentage effect on the value of export. So we do have a figure which we will factor in after discussion with the Department of Revenue".

For purposes of exports, he said, it is clearly the practice all over the world that both in manufacturing and services, duties must be neutralised for export. "Exports should not be treated as the milch-cow for revenue purposes and that is the vital part," he said.

At the national level, Mr Menon said, "we must be focused to see that the Special Economic Zone (SEZ) policy goes through and whatever the differences there are between the departments have to be ironed out. It is vital in our national interests that the SEZ policy gets off the ground in a positive manner as projects coming up in the SEZ will make a very substantial impact on infrastructure and growth".