Just two days after finance minister Pranab Mukherjee announced the third fiscal package to spur the economy,commerce and industry minister Kamal Nath today followed suit with a range of measures to stimulate the export sector.
Announcing the interim foreign trade policy,Nath unveiled a host of sectoral measures to aid traditional export sectors such as leather,gems and jewellery and textiles. Some of these include a special corpus of Rs 325 crore set aside for leather and textiles,recognition of Bhilwara and Surat as towns of export excellence for textiles and diamonds,removal of import restrictions on import of worked corals,etc. Also,under the Export Promotion Capital Goods scheme,for products that have seen a decline of more than 5 per cent in their exports,the export obligation of all exporters will be reduced proportionately.
Apart from sectoral measures,he also announced a slew of instruments aimed at giving an impetus to the overall export sector like issuance of duty drawback scrips without waiting for export proceeds,reduction of the threshold limit for recognition of premier trading houses to Rs 7,500 crore from the previous Rs 10,000 crore,simplification of the procedure of duty drawback refund and refund of terminal excise duty,etc. The ability to claim tax refund without waiting for realisations will help exporters maintain their business cycles. This will help almost all exporters, said Lalit B Singhal,director general of the Export Promotion Council for EOUs and SEZs. Nath added that export of handmade carpets would now get a 5 per cent incentive as against 3.5 per cent earlier.
With various countries announcing different fiscal measures to stimulate their economies,Nath claimed that as demand improved across the globe,exports would regain their rigour soon and should reach $200 billion in 2009-10,the export target that was originally set for this fiscal year. Nath added that the government had revised current years target to $170-175 billion from $200 billion in view of the global slowdown. Total exports for this year from April to January have reached $144.26 billion,a 13.2 per cent jump over the same period last year. With the next two months looking bleak for foreign trade,RS Gujral,director general of foreign trade,said there might be a decline in exports in February and March too.
Though the industry reacted positively to the new measures,there were some who thought that there was still room for more to be done by the government on the export front. Speaking to The Indian Express,Rakesh Vaid,chairman of the Apparel Export Promotion Council said,It is a welcome step,but one doesnt understand why textiles,being a major labour-intensive export sector,hasnt been given more consideration. Others pointed out the government also missed out on the issue of derivative losses on account of rupee depreciation.