Booster dose likely for export promotion schemes

Amiti Sen New Delhi | Updated on June 05, 2014 Published on June 05, 2014

Service exporters may be allowed to use duty exemption scrips to pay service tax

Exporters of both goods and services are likely to get more incentives in the foreign trade policy. The Government is seeking to make promotion schemes more effective in order to lift sagging exports.

To ensure that all service exporters benefit from the ‘served from India scheme’, the Commerce Ministry is looking at allowing import duty exemption scrips (given as incentive under the scheme) to be sold in the market or used to pay service tax, a Government official told Business Line. This will benefit service exporters who do not import any inputs and are hence not able to use the scrips.

The ‘served from India scheme’, which allows exporters with foreign exchange earnings of at least ₹10 lakh import duty exemption scrips worth 10 per cent of exported value, would be much more effective if the scrips can be used to pay service taxes or be traded, said FIEO Director-General Ajay Sahai. “At present, only the hotel industry is using the scrips as it imports liquor and vehicles. For most others, the scheme is not of much use,” Sahai added.

More specific

The Commerce Ministry is also working on making the existing Focus Product Scheme — which gives sops to identified labour-intensive products — more specific by covering fewer items and increasing the amount. “We have decided to make the incentives high enough to contribute to greater exports. Also, all schemes should be well-focussed and not riddled with conditions that reduce effectiveness,” the official said.

The proposals, being firmed up by the Commerce Ministry in consultation with exporters, will be discussed with the Finance Ministry soon. The annual Foreign Trade Policy will be announced after the Union Budget scheduled next month.

India missed its goods export target of $325 billion for 2013-14 with shipments during the year posting a rise of 3.98 per cent to $312.35 billion.

The cost disadvantage that Indian exporters face is as high as 8-10 per cent and an incentive of 2-5 per cent can’t help much, the official said. “The Focus Product Scheme covers hundreds of items and needs to be narrowed down to those that actually need the push. Incentives for the targeted items could then be higher,” the official explained.

Published on June 05, 2014
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