New norms to lower costs

Simplification of procedures and rationalisation of measures which have been announced by Commerce Minister Kamal Nath in the Foreign Trade Policy would bring down the transaction costs for exporters. The salient simplification measures include exempting exporters with a minimum turnover of Rs 5 crore from bank guarantee and also exempting all goods and services exported from service tax.

While this will help small exporters, both the steps will bring down the transaction cost. However, the industry feels abolition of the central sales tax in EoUs could be another step in this direction.

L.B. Singhal, DG, Export Promotion Council for EoUs and SEZs said, “Simplification of procedures have remained on paper earlier but, if implemented, these steps would drastically bring down the cost.” However, he is of the view that it is sensible to abolish the central sales tax for the EoUs since the units pay the tax first and are then refunded. “It is a useless piece of paper work and removal of this would be revenue neutral”.