The Hindu Business Line : Gem & jewellery sector may get trading hub status — To beat competition from Dubai, Shanghai & other centres

Industry & Economy - Gems & Jewellery

Gem & jewellery sector may get trading hub status — To beat competition from Dubai, Shanghai & other centres

G. Srinivasan

The Commerce Secretary, Mr S. N. Menon

New Delhi , Feb. 10

THE Department of Commerce is working on providing an enabling environment for converting the country's processing hub status for gem and jewellery into a trading hub so that competition from Dubai, Shanghai and other centres could be met head-on and exports of gem and jewellery stepped up substantially.

Disclosing this to Business Line here in an interview, the Commerce Secretary, Mr S.N. Menon, said his department had been interacting with the Finance Ministry on various trade-related issues for the coming Union Budget and also the modifications to the Foreign Trade Policy (2004-09).

He said most of the issues boiled down to seeking rationalisation of duties and reduction of transaction cost to trade and industry. "We have put up our concern on the fringe benefit tax and service tax to the Ministry of Finance and it is for them to take a decision," he said.

Exporters' complaints: When his attention was drawn to the frequent complaints of exporters that the Revenue Department does not operationalise or delay in operationalising most of the beneficial schemes for exporters, Mr Menon said that in some aspects of the earlier foreign trade policy, there were some problems to exporters. But the committee comprising the Central Board of Excise and Customs Member, Mr A.P. Sudhir, and the Directorate-General of Foreign Trade (DGFT), Mr K.T. Chacko, has submitted a report to the Government recommending correctives and "we are in the process of implementing them".

Stating that facilitation of export remains always a work in progress, Mr Menon said, "we still need to continue building systems for exports — the issue is fundamentally building systems which are people-neutral and which cover procedures, practices and reduction of the transaction cost and also the electronic data interchange (EDI), besides export infrastructure."

He is optimistic that in the next six months, EDI from DGFT and the Customs would be in place in all the 24 major ports in the country.

Budget wish list: Asked about what the wish list of exporters for the Budget and how his department is proceeding in this regard, Mr Menon said, "we have suggested rationalisation of duties and removal of inverted duty structure in some areas and we feel that where corrective action has been taken in other areas, promotion of reduction in duties and employment in sectors which generate employment and these should be looked into".

He said rationalisation means lower duties, both in customs and excise, for sectors which are highly employment generating.

Revenue loss: To a query about the notional loss of revenue to the exchequer for duties foregone in export promotion schemes, Mr Menon said, "I don't believe so. The fact is that we are not neutralising various levies/duties both at the Central and State levels and unless that is neutralised, we cannot say they are all sops. It is unfair to use the word sops for anything being given to exporters because it is really some of the transaction cost which are being borne."

He said that is why the Committee of Secretaries was very clear that all duties and levies that the export products carry should be neutralised. This is permissible as other countries are doing this and India should also do it.

He also stated all export promotion schemes such as advance licensing and export promotion capital goods would continue and "we are looking at certain aspects of the Target plus scheme to remove some of the areas of distortions and those notifications, we expect, to be issued shortly."

Some of the high value items would be taken out of it and action is being initiated on that.

DEPB: Referring to the Duty Entitlement Passbook Scheme (DEPB) and the delay in announcing its replacement scheme, Mr. Menon said, "We have finalised the scheme. But the Government has to take a final decision whether we could extend the existing scheme for a longer period or take up a new scheme."

Mr Menon said that even as the DEPB has been extended up to March 31, 2006, the new scheme would be in place before that. Except for 2001-02, the country's export growth had been above 20 per cent in dollar terms and last year, it was 26 per cent. Because of the larger base last year, this year's export target has been set at 16 per cent in dollar terms and given the trends during the first three-quarters, "we hope to overshoot the target", he said.

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