The Hindu Business Line : Egg processors seek 5 pc export incentive

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Indian processed egg exporters managed to realise price below the cost of production due to hefty import duty at 1.4 per kg of egg powder, which amounts to about 35 per cent of the realisable price.

Coimbatore , Aug. 11

The Indian Egg Processors Association is upset over the denial of five per cent export incentive allowed for the export-oriented egg processors, under the `Vishesh Krishi Upaj Yojana'.

The move, to deny the incentive, is hampering the sustainability of the export-oriented units (EoUs) engaged in egg processing, it feels.

Incentive

The association has maintained that the Centre had introduced the scheme of providing duty credit scrip equivalent to 5 per cent of the f.o.b. value of exports to egg processor, under the scheme. It had confirmed the eligibility of the scheme for the EoUs engaged in egg processing through its policy circular no.25 (RE-2005/2004-2009 dated 31.8.2005 at par with those operating in the domestic tariff area (DTA).

But when the Government replaced the scheme with the "Vishesh Krishi Gram Udyog Yojana', under the Foreign Trade Policy for the financial year 2005-06, the 5 per cent export incentive was not extended to the EoUs, Mr S.K.M. Shree Shivkumar, President of the Indian Egg Processors Association, said.

The non-extension of the 5 per cent export incentive to the EoUs was decided on the presumption that EoUs were given more fiscal concessions than the DTA units. But in reality, all the tax concessions allowed for the EoUs are also extended to the DTA units and, hence, the denial of the export incentive has put the EoUs at a disadvantage over their DTA counterparts.

Current situation

The egg processing industry remained unprofitable on account of severe pressure on their sale price in international market due to heavy market protection and subsidies extended to their competitors from developed countries such as the European Union and the US.

Indian processed egg exporters managed to realise price below the cost of production due to hefty import duty at 1.4 a kg of egg powder, which amounts to about 35 per cent of the realisable price, Mr Shivkumar said.

The Indian egg processors could hardly realise the price for their produce in Japan, South-East Asian or West Asian markets due to huge subsidies given by the US/EU for their exporters, ranging from 0.5 to 1 a kg depending on the product/market conditions.

Traders' plea

The association has urged the Union Government to address the issue of removing the trade obstacles imposed by the developed economies in the form of higher subsidies/market protections by negotiating suitable subsidy reduction proposals so as to improve the commercial viability of India's processed egg products.

At the same time, the association wants the Centre to extend the export incentive for the processed egg exporters till 2010 by which time, a negotiated settlement on lowering the duty/subsidies on farm products could be reached through the WTO ambit.

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