The Hindu Business Line : Govt outlines steps for cutting transaction cost

New Delhi April 19 The Commerce and Industry Minister, Mr Kamal Nath, on Thursday unveiled a string of measures to cut down transaction cost to trade and industry as India has to continue to grow through the trade route and high transaction cost could weaken the competitive strength of domestic industry seeking markets abroad. .

The annual supplement to foreign trade policy, announced on Thursday, accordingly said that verification of documents under various export promotion schemes would be similar to those of DEPB (Duty Entitlement Passbook), which has now been online.

Second verification by customs authorities under Export Promotion Capital Goods (EPCG) and advanced authorisation schemes would be resorted to only on a random basis.

Transaction time is sought to be further slashed through the electronic data interchange (EDI) system.

Second, installation certificate on imported capital goods could now be obtained from a Chartered Engineer instead of only an excise official.

Simplified forms

Third, the length of the "Aayat Niryat Form" has also been reduced substantially, dispensing with repetitive and not so relevant information. He said a similar exercise would be executed for all other forms.

The word "manufacturing" is being clearly defined in the new Income Tax Code to ensure greater predictability and stability in determining tax liability of domestic manufacturers.

Alongside, the policy has also done away with the extant restrictive requirement of block-wise fulfilment of export obligations. This would not only cut down transaction cost and paperwork but also minimise the effect of cyclical fluctuations in global markets. Wherever there is more than one concurrent EPCG authorisation issued, the fresh EPCG authorisation would build upon the last required average export obligation only, despite the actual achievements of the previous year. This way better performance would not be penalised. Additionally, Mr Nath said, "we are providing for waiving the outstanding export obligations, where force majeure and other unforeseen circumstances have prevented the fulfilment of the export obligations.

In a move designed to provide a modicum of comfort to exporters who could not realise their drawback and other duty remission benefits in time, the policy proposes that effective from April 1, 2006 (retrospectively), interest would be paid on delayed refund on terminal excise duty, duty drawback on deemed exports and refund of Central Sales Tax (CST) on supplies to EOUs. This would be analogous to the facilities given on delays in customs and income tax refunds by the respective departments, he said.