Nathu la Sino-India trade to from May 1

The annual trade between the traders of India and China at Nathu La would start from May 1 this year, a Sikkim government official said today.

"We are in the process of verification of the applications of the traders before issuing them passes for participation in the trade at Nathu La," the District Collector (East) Vishal Chauhan told PTI here.

A function would be held at Nathu La frontier to mark the formal inauguration of the annual trade on May one and thereafter, the traders of the two countries would participate in trade of various commodities as per the list of goods released by the two countries for export and import, he said.

Meanwhile, the Indo-China Traders Association of Sikkim (ICTAS) demanded an upward revision in the number of items to be exported by the Indian traders at Nathu La mart in order to make the business financially viable for the traders.

"We had put up a demand with the union commerce ministry for an increase in the list of items from the present 29 to 100 in order to make the border trade more viable for our traders," the ICTAS president Anil Kumar Gupta said.

The low volume of business was the major concern of the Indian traders over the past two years which should be addressed by the concerned authorities by expanding the lists of items, he said.

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Govt. open to reviewing SEZ Act, says Nath

New Delhi (PTI): Facing flak from Opposition as well as supporting Left parties on the SEZ issue, the government on Tuesday said it is open to reviewing the law governing the special economic zones.

The Government also ruled out FDI in retail sector, an area which has come under sharp criticism from traders and parties across the political spectrum.

Allaying apprehensions expressed by members during a discussion in the Rajya Sabha on working of his Ministry, Commerce and Industry Minister Kamal Nath said, "we will review the SEZ Act if we find it requires revision."

He said only 80 to 90 SEZs have become operational and once the figure reached the 100-mark, the Government would carry out a detailed review to find out whether the law has been misused.

The debate saw Opposition members questioning the "reckless" approval of tax-free zones, with BJP alleging that most of the land "was being grabbed by land sharks to set up hotels and malls in the name of SEZs".

On the impact of FDI in retail on small traders, Nath said, "we cannot have anything which rocks the boat of existing employment."

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FIEO panel seeks long-term strategies for agro exports

Mangalore, April 12 The FIEO (Federation of Indian Export Organisations) Committee on Agro Exports and AEZ has stressed on the need for long-term strategies for the growth of agro exports.

Reacting to the annual supplement to the Foreign Trade Policy 2004-09 — which was released by the Union Commerce Minister, Mr Kamal Nath, Mr Walter D’Souza, Convenor of the committee, said that the annual supplement has continued with a few of the short-term measures required to boost agro exports, without addressing the all-important long-term strategies that will lead to India getting its due place among the comity of nations of the world.

Achieving 5% share

If the dream of achieving 5 per cent share in global trade has to be a reality, it is imperative that the Ministry adopts long-term strategies.

“On the agro exports front, it is necessary to arrest the colossal waste of agricultural produce, by addressing infrastructural and logistic issues such as cold chains, railway connections and air cargo complexes with fastest connectivity,” Mr D’Souza said.
Future planning

It is also important to incentivise the packaging of the Indian agro merchandise to raise the bar to international levels.

The policy has not addressed these issues enough. It is time the Ministry looked at the need-based financial allocations on these areas as an investment in the future rather than expenditure for the present, he said.

“We request the Commerce Minister to interact with the agro exporters and chalk out a road map that will give a paradigm shift for the growth of the Indian agro exports,” he said.

The short-term policies include general incentives such as duty entitlement passbook and streamlining of procedures.

The incentive in the form of interest subvention is welcome to tide over the problem in the wake of currency appreciation, he added.

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Indian exports to gain edge over China in the long run, says Nath

New Delhi, April 12 Indian exports will have a competitive edge over China in the long term as the latter addresses the backlash on its currency on account of the huge trade imbalances with other countries, according to the Union Commerce and Industry Minister, Mr Kamal Nath.

“China is under a lot of pressure on their currency. In the long run, I see the Chinese currency appreciating much more. China is conscious that their huge trade imbalances with other countries are having a backlash and that backlash is already coming on their currency.

“With declared inflation of 10.5 per cent and pressure on their currency, their costing will undergo a change. That’s what makes me confident about India achieving $200 billion exports this fiscal,” Mr Nath said at a CII meeting on foreign trade policy here on Saturday.

He said China would have to remove the “artificiality” in the currency and pointed out that India does not have to do any such thing as there was no artificial peg.

“That’s why we will have the competitive edge,” he said.

Stating that the whole objective of the annual supplement to the foreign trade policy was to continue with the economic momentum in the country, Mr Nath said the main challenge for exporters would be that of occupying space in new markets.

He urged industry bodies including CII and FICCI to submit suggestions on the products and countries that could be included in the ‘Focus Product’ and ‘Focus Market’ schemes.

The annual supplement had announced intent to calibrate the Focus Products and Focus Markets schemes so that some products of high export intensity (not covered under the FPS) but which have low penetration in countries (which are not covered under FMS) would be considered for export incentive as a focus product for that country.

A case in point could be garments exports to the Japanese market.

Meanwhile, official sources said that a Cabinet committee is likely to meet here on Tuesday to consider several measures aimed at taming the surge in steel prices.

Indications are that the committee may consider proposal to ban steel exports and reduction in excise duty on steel.

Cement ban not to affect SEZ supplies: The cement export ban will not be applicable for supplies made to special economic zones, the Commerce and Industry Minister, Mr Kamal Nath, has said.

“We will clarify that the ban does not apply for cement supplies to SEZs,” Mr Nath said at a FICCI meeting here on Saturday.

Earlier in the day, Mr Nath said that the notification on cement exports ban was issued on Friday night.

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No plans of giving up on rebating State-level taxes, says Kamal Nath

New Delhi, April 11 The extension of the Duty Entitlement Pass Book (DEPB) scheme up to May 2009 notwithstanding, the Commerce Ministry has not given up on the plans for formulating a scheme that would also rebate State-level taxes, the Commerce and Industry Minister, Mr Kamal Nath, has said.

“No, we are not giving up the idea of rebating State-level taxes. There are certain issues. We are looking at a new scheme. The Finance Commission has also been tasked to look at trade issues,” Mr Nath told in an interview soon after the announcement of the final annual supplement to the Foreign Trade Policy 2004-09 here today.

The exporting community has for years been demanding that the State-level taxes be rebated to help improve their competitiveness in the international market.

On whether units in the software technology parks of India (STPI) would also get one-year extension of Section 10B benefits, beyond 2009, Mr Nath replied in the negative. “It is only for EOU units that this extension would be applicable,” he said.

The income tax exemption available to 100 per cent EOUs under Section 10B of the Income Tax law is to expire on March 31, 2009. The EOUs have got tax exemption for one more year, beyond 2009.

To curb inflation, the annual supplement has also announced the withdrawal of incentives under promotional scheme on export of cement and primary steel items. For primary steel items, Mr Nath highlighted that the incentives under the Focus Market scheme have been withdrawn. The idea is to discourage exports of primary steel and ensure their availability for the engineering sector.

On why cement exports have been banned, a measure done today and not part of the annual supplement announcements, the Minister said that the move would help augment domestic supplies. With the demand for cement expected to increase during April-June, he said that a ban on cement exports would to some extent improve availability and address the demand–supply mismatch.

On whether the Government plans to ban exports of primary steel or do away with customs duty on steel imports, Mr Nath said that more steps are on the anvil to tame inflation. He however ruled out ban on iron ore exports.

“The cabinet committee will consider appropriate measures on a realistic and holistic basis. I think inflation will be controlled. Production has not gone down in any of the items. State Governments have been urged to take steps so that they can fulfill their part and ensure that there is no hoarding or profiteering,” he said.

To a query on the cost to the exchequer for extending interest subvention by one more year, Mr Nath said that it would be Rs 1,050 crore during 2008-09 and would be passed on to the Reserve Bank of India.

On whether the annual supplement has addressed the issue of transaction cost reduction to the best possible extent, Mr Nath said that “large number of procedural issues had been taken care of. I took care of them in the last three years also”.

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Proactive support from Govt key to achieving export target: DGFT

New Delhi, April 11 The annual supplement to the Foreign Trade Policy (FTP) setting out an ambitious 30 per cent export target for the current fiscal in the face of a likely global slowdown would entail not only all the efforts on the part of our exporters but pro-active support from the Government, the Director General of Foreign Trade (DGFT), Mr R.S. Gujral, said today.

In an interview here soon after the policy supplement was unveiled by the Union Commerce & Industry Minister, Mr Kamal Nath, here, the DGFT said that a review of the last year’s export performance reveals that there were specific sectors where there has been a decline in export.

“Significant are those sectors where they are labour-intensive and less import-intensive. Those sectors have obviously been provided additional relief in this policy — whether it is vegetables, fruits or floriculture, additional amounts have been provided.”
Focus market

The Minister also said that Focus Market and Focus Products schemes would be calibrated — some focus markets with 10 of them announced, the incentives would be sought to be calibrated so that some support is provided to the sector which have been hit by the rupee appreciation to seek new markets in these identified countries, he added.

Asked about relief to export segments that had been affected by the rupee appreciation, Mr Gujral said that the average export obligation under Export Promotion Capital Goods (EPCG) scheme would be reduced by the percentage of the reduction in the overall exports if that is beyond 5 per cent. He said there are about 8 to 10 major areas where the exporters would all get the benefits — coffee, cashew, handicrafts, carpets, some silk readymade garments and certain segments of readymade garments such as cotton and plastics where there has been more than 5 per cent decline in exports.
Transaction costs

To a specific query about reduction in transaction cost to trade and industry, the DGFT said that the policy mentions about 25 major measures in this area. In certain areas, specific timeframe is provided where Central Excise/Customs should provide the certification for clearance within 21 days or 30 days. Some additional ports have been notified for the export incentive schemes to reduce transaction cost.
Electronic data interchange

On electronic data interchange (EDI) to bring benefits to exporters reeling under relentless transaction cost, Mr Gujral conceded that the right thing is to have a 100 per EDI interface for all the schemes operated by the Ministry. He said that under DGFT, currently EDI exists only for Duty Entitlement Pass Book (DEPB) scheme.

“There were a lot of glitches in that scheme for a period of 6 to 7 months, those all have been resolved,” he said adding that “we have mentioned in the supplement that two other schemes — Advance Authorization Scheme and EPCG — would be brought under within three months. Obviously all other schemes would take a little longer time. We have not specified a clear target but Focus Product, Focus Market, Vishesh Krishi and Gram Udyog Yojana (VKGY) have been kept in the next phase after we bring in advance authorization an EPCG under EDI mode.”
Procedural simplification

Asked whether he would confidently say that procedural simplification and cumbersome schedules for exporters have been totally done away with, Mr Gujral said, “My response to this is that in normal course, DGFT will not have made any change in procedure/policy in the last 10 months or so I have been there. The tendency is to put changes in the policy. There were close to 50 issues where procedural simplification or resolutions of problems were to be done. I told my officials let us not wait for policy. If exporters face problem, we don’t need to wait for policy and we need to solve them at once. We have done that and the changes announced in the policy today are over and above that”.

He said that the job of the DGFT is to facilitate and to provide an enabling environment and that is what we have done and “I have full confidence in the resilience of our exporters” in compassing the export target set for the current fiscal.

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Export oriented units get extension of I-T benefit

New Delhi, April 11 A slew of measures to pep up export of traditional industries hit by the rupee appreciation, major spurs to cut down transaction costs, procedural simplification, extension of the popular duty neutralisation DEPB (Duty Entitlement Pass Book) scheme till May 2009 and also a one-year extension beyond March 2009 in income-tax benefit to 100 per cent export units are outlined in the annual supplement to Foreign Trade policy.

Releasing the final year supplement to the FTA (2004-09) here on Friday, the Union Commerce and Industry Minister, Mr Kamal Nath, announced an export target of $200 billion for the current fiscal, against $155 billion export performance achieved in 2007-08.

He said the achievement fell short by $5 billion due to the effect of an appreciating rupee by more than 12 per cent against the dollar in 2007. If trade in services were added, India’s commercial engagement with the world would be $525 billion, he said.

In order to achieve the export target, Mr Nath announced tax refunds and interest subsidies to a spate of export segments that are labour-intensive in nature such as marine products, leather, textiles and handicrafts and 5 per cent additional duty credit for export of toys and sports goods.
Agri products

For agricultural products, additional duty credit of 2.5 per cent for export under Vishesk Krishi and Gram Udyog Yojana (VKGUY) is provided for export of certain flowers, vegetables and fruits.

In the Focus Market scheme, 10 more countries including Mongolia, Bosnia-Herzegovina, Albania, Croatia, Honduras, Sudan, Ghana, and Colombia were included.

Under the Industrial Park Scheme, it has now been decided to include IT, ITeS and R&D in natural science and engineering as industrial activities allowed in the parks, he said.

While the customs duty payable under Export Promotion Capital Goods (EPCG) Scheme has been cut from 5 per cent to 3 per cent, average export obligation under the scheme for premier trading houses would be calculated based on the average of the last 5 years’ export instead of the extant 3 years. Alongside, reduced average export obligation under EPCG for sectors that have seen decline in exports in the previous year is also announced.

Mr Nath also unveiled a plan , for value-added manufactured products and said the list of products would be notified shortly. The government would also set up an export promotion council for the telecom sector to augment its exports and would also set up hubs for auto parts, drugs, and petroleum and information technology.
Trade outlook

The Minister also declared that the country hoped to take a five per cent share of global trade by 2020, a four-fold spurt in the next 12 years and a growth rate of 25 per cent consistently in the years ahead.

Other measures announced include treating of all electronic data interchange (EDI) ports as single port, reduction in application fee for duty credit scrips and EPCG authorisation, reduction of application fee for importer and exporter code and a joint task force to plan an integrated trade strategy to address structural problems of exporters.

EOUs would be allowed to pay excise duty on a monthly basis instead of consignment basis. To ensure that terminal excise duty and central sales tax refund is made on time, interest at 6 per cent a year is to be paid to the exporter where refund is not made within one month of the due date.

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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.

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Kolkata, April 11 Describing the recent Service Tax Refund Notification on Foreign Commission Agents (FCAs) issued by the Finance Ministry as “bureaucratese at its worst”, Mr Rakesh Shah, Chairman of Engineering Export Promotion Council (EEPC), said here that it goes not only against the RBI guidelines but also against the Department’s own notification issued in 2002.

Talking to Business Line, Mr Shah said the April 1, 2008 Notification has allowed refund on the service tax paid to foreign commission agents to the extent of only 2 per cent of the f.o.b. value of exports, “when the RBI guidelines allow FCAs to be paid up to 12.5 per cent of f.o.b. value of exports”.

He said the Department of Revenue by its own circular issued in 2002 had clarified that for those exporters availing of export benefits, the foreign agency commission would be 12.5 per cent.

He said it was surprising that the April 1, 2008 Notification has set a limit of only 2 per cent of f.o.b. value of exports for foreign commission agent’s payment to be refundable.

“The 2 per cent f.o.b. limit is hardly acceptable in these times and will not in any way benefit exporters.”

Pointing out that the principal notification with regard to the 16 services that come under the purview of service tax refund was issued on October 6, 2007, Mr Shah observed that this notification had a further restrictive provision which states that the refund claim has to be filed on a quarterly basis, within 60 days from the end of the relevant quarter during which the said goods have been exported.

He said most exporters pay commission to their respective foreign agents only after realisation of export proceeds. The period allowed for export proceeds realisation by RBI is 180 days for exporters and 360 days for status holders. According to him, if exporters have to claim service tax refund within a period of 90 days as ordained by the October 7, 2007 Notification, it would further add to the fund squeeze that small and medium exporters were now facing, confronted by the rupee appreciation and sharp increase in raw material prices.

Mr Shah said he has already represented the above anomalies to the Finance Minister and Commerce Minister, requesting that the service tax refund limit on foreign commission agents be increased to 12.5 per cent of f.o.b. value from the allowed 2 per cent.

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Kamal Nath unveils annual supplement to Foreign Trade Policy

NEW DELHI: 11 April; Union Commerce and Industry Minister Kamal Nath on Friday announced various measures to check spiralling inflation, extended sops to exporters to sustain growth in the export sector and gave relief to sectors hit by rupee appreciation vis-a-vis dollar in the current fiscal.

Releasing the annual supplement of the Foreign Trade Policy (FTP) here on Friday, Mr. Kamal Nath said: “To curb inflation on essential items, the Government has banned export of non-basmati rice, edible oils and pulses. Now we are banning export of cement too, while tax incentives and the promotional scheme on export of rice and primary steel items are being withdrawn.”

DEPB scheme

Lauding exporters for their resilience and hard work in sustaining the growth momentum, Mr. Kamal Nath announced a slew of ‘innovative steps’ that included extension of the ‘Duty Entitlement Passbook’ (DEPB) scheme till May 2009; extension of the interest subvention scheme where exporters are given bank credit at a reduced rate of 6 per cent; reduction of customs duty payable under the ‘Export Promotion Capital Goods’ (EPCG) scheme from 5 per cent to 3 per cent; and lowering of average export obligation under the EPCG scheme. “The Interest subvention scheme would mean an outgo of Rs. 1,050 crore from the Central Exchequer in the current year,” he added.

IT exemption for EOUs

The Minister also extended income-tax exemption to 100 per cent export oriented units (EOUs) beyond 2009, announced additional duty-free credit of 2.5 per cent under the ‘Vishesh Krishi Gram Upaaj Yojana (VKGUY) to boost exports of fruits, vegetables and flowers besides giving 6 per cent interest annually to exporters if refunds are not made within one month of the due date. However, the Software Technology Parks of India (STPI) scheme, which also faces uncertainty over continuation of the tax benefits, will not get advantages of EOUs.

Similarly, Mr. Kamal Nath announced additional credit of 5 per cent for sports and goods industries under the ‘focus product scheme’; special focus initiative for the information technology (IT) sector; inclusion of IT and IT-enabled services and research and design in natural sciences under the ‘industrial park scheme’; and establishment of ‘Export Promotion Council’ (EPC) for telecom; and extension of re-import of branded jewellery to one year.

Stating that the Indian telecom sector has seen a dramatic growth, Mr. Kamal Nath said the telecom EPC would be set up in partnership with the private sector to boost exports. Exports from the telecom sector were likely to more than double to Rs. 4,000 crore this year from Rs. 1,800 crore in 2007-08, he added.

Under the focus market and product schemes, Mr. Kamal Nath said the coverage had been increased and ten more countries — Mongolia, Bosnia-Herzegovina, Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana and Colombia — were being included.

Mr. Kamal Nath said the FTP initiatives in the last four years had resulted in increased trade activity and had generated additional employment of 136 lakh. “Exports are not just about earning foreign exchange, but about boosting the manufacturing sector, creating large-scale economic activities and generating employment opportunities. India’s total merchandise trade (both exports and imports) will be $400 billion during 2007-08, accounting for nearly 1.5 per cent of world trade. If trade in services is added, our commercial engagement with the world would be to the tune of $525 billion,” he added.

The Minister pointed out that the new FTP (2004-09) had more than doubled India’s exports in the last four years. The country’s exports in 2007-08 had exceeded $155 billion from $63 billion in 2004, registering a cumulative annual growth rate (CAGR) of 23 per cent, year-on-year, and way ahead of the average growth rate of international trade.

“And this we have achieved despite appreciation of the rupee, high interest rates, spiralling oil prices, slowdown in major trade markets, and withdrawal of some GSP (generalised system of preferences) benefits to India by other countries,” he said, adding that “India should achieve 5 per cent share of world trade by 2020. As a means to achieve this, an export target of $200 billion has been set for 2008-09.” Noting that there are still many structural problems to be addressed, Mr. Kamal Nath announced setting up of a ‘joint task force’ (JTF) to plan an integrated strategy to tackle these issues. The task force would look at development of world-class infrastructure to facilitate trade, involving an investment of over $800 billion; find measures to ensure trade facilitation; look into development of global manufacturing hubs in selected sectors including auto-components, gems and jewellery, textiles and petro-products.

Talking about ‘special economic zones’ (SEZs), Mr. Kamal Nath said: “the Government views it as vehicles of industrialisation and employment generation. SEZs currently provide employment to more than 2.8 lakh people and the projected exports from SEZs would reach Rs.1.25-lakh crore by this year.”

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