Ministry keen on cost reduction to trade, not seeking sops

New Delhi, April 11; The Commerce Ministry is not seeking sops for exporters but only insisting on reduction of cost to trade and industry that operate in a high-cost economy with a multitude of problems - from high power cost to inadequate infrastructure facilities - that obstruct the flow of goods across the country and out of it.

In an interview on the annual trade policy supplement, the Commerce Secretary, Mr Gopal K. Pillai, said while the port capacity is increasing by 10 to 12 per cent in a year, exports are going up by 20 to 25 per cent and import growth is accelerating. The resultant congestion and other constraints are forcing people to make changes. Suddenly, container terminals are coming up in three months and minor ports are coming up in Andhra Pradesh, Mundra and Pipava, he said adding that some of these ports are handling 50 million tonnes, when five years ago it was zero. He said that on the western coast, minor ports would take up a lot of slack and major ports will still have problems in augmenting capacity.

Mr Pillai said transaction cost is also reflected by State levies which are not reimbursed now. He said that "after a lot of struggle, we managed to get 19 notifications of exemption from services tax. There is still one or two problems, we hope to solve it shortly".

He said the extension of the Duty Entitlement Pass Book Scheme (DEPB) till May 2009, extension of interest subvention at 7 per cent for traditional items hit by rupee appreciation and the enhanced DEPB rate applicable to them would help small and medium exporters in a big way. The provision of Rs 1,500 crore for interest subvention for the traditional sector and another Rs 1,000 crore for sports goods, toys and handicrafts would bring additional benefits to exporters.

Food security

When asked if frequent changes in export-import policy, such as putting a ban of export of rice, would affect the promised stability of the policy, Mr Pillai said " when it comes to the issue of food security, the Government cannot take the risk of not ensuring domestic availability. Each year, four million tonnes of non-basmati rice are exported. But when it went to five million tonnes last fiscal, the alarm bell rang and a ban on this type of rice was imposed as an advance action to avert domestic supply shortfall".

To a query on grabbing a five per cent share in global trade by 2020 as laid out in the policy today, Mr Pillai said that "structural weaknesses of the traditional industries, which are labour-intensive, need to be addressed and that is why the policy lays so much stress on extending relief measures to these units."

He said that it would be difficult to have a five per cent share in global trade if the manufacturing growth of 10 to 12 per cent per annum is not achieved.

He, however, hastened to add that with the sort of hubs like petrochemicals and special economic zones that dot the industrial map of the country at present, there is hope on the manufacturing front. This would be complemented and supplemented by policy support from all the Ministries in a holistic and integrated fashion, Mr Pillai added.

On the export target fulfilment of $200 billion for the current fiscal, Mr Pillai said that "it is on the high side but it is still possible. I think if the rupee appreciation does not take place drastically but gradually, the exporters would be able to absorb the effect" to ensure the target realisation with the kind of supportive policy the Government has laid out on a continuous basis.