Export-oriented units set to get tax break for another year

The EOU scheme, which expired on March 31, is expected to be extended by one more year and the Duty Entitlement Passbook (DEPB) scheme will be extended by 14 months to boost the manufacturing sector.

As a measure to check inflation, the policy will reaffirm withdrawal of the DEPB scheme for steel and rice. Not only will this save revenue, it will discourage exports of these vital consumer commodities. In fact, at the last meeting of the Cabinet Committee on Prices (CCP), it was found that non-revision of steel prices in the WPI basket for the past 28 weeks had also contributed to inflation.

Prepared after extensive consultations with Prime Minister Manmohan Singh and Union minister Pranab Mukherjee, the trade policy will spell out the government’s desire to expand the market for Indian exporters by exploring new markets with focus products.

With China in the middle of a toy controversy, Nath is expected to offer 5 per cent incentive for sports goods and toy exports. In short, the exporter will be given a voucher that can be encashed during import of material.

But the key policy measure will be joining of the focus product and the focus market scheme. This is illustrated by the fact that focus products like garments are largely exported by Indian companies to Europe and America, though Japan happens to be a large market for other Indian goods.

Under the new policy, exports to new markets will be encouraged so as to expand the Indian product reach through incentives.