The Hindu : Business : New omnibus trade policy on August 31

Online edition of India's National Newspaper
Saturday, Aug 28, 2004

Business

Business

New omnibus trade policy on August 31

By Sushma Ramchandran

NEW DELHI, AUG. 27. In the backdrop of robust 25 per cent export growth in the current fiscal, the Government plans to outline a new omnibus foreign trade policy to replace the earlier annual Export-Import policy. With most regulations relating to exports having been eased and quantitative restrictions on imports having been largely eliminated, the aim is now to present a policy covering the entire gamut of foreign trade rather than merely the procedural aspects.

1 per cent world share

Official sources say the new policy being released on August 31 by the Commerce and Industry Minister, Kamal Nath, seeks to provide a direction and strategy to enable the country to attain at least a one per cent share of world trade in the medium term. It will also seek to cut red tape even further for exporters as the number of clearances required for carrying out foreign trade remains at double-digit levels. The sources say the Commerce Ministry has been working closely with the Customs Department to streamline procedures both for importers and exporters so that there is greater transparency and documentation is cut down to the minimum.

As far as existing export incentives are concerned, exporters can heave a sigh of relief as the DEPB (duty entitlement passbook scheme) will be continued at least for another year. This may be the last year of this incentive, however, as the Ministry is not convinced that the scheme is compatible with World Trade Organisation (WTO) regulations. For the time being, however, the scheme which provides a facility for easy import of inputs to exporters will continue till the end of the current fiscal.

Focus on SEZs

With the focus now being on the special economic zones (SEZs), the policy is likely to unveil special concessions for exporting units being set up in these areas. Though the SEZs have yet to take off, these have been modelled on similar zones created in China which have enabled that country to become a giant exporter. It may be difficult, however, to provide the "hire and fire" facility that manufacturers are seeking in these zones as is the case in China. The previous NDA Government was not able to provide this facility and the present UPA Government supported by the Left parties will find it even more difficult to do so.

Sources say the new policy will cover the issues related to the proposed free trade zones which this Government is seeking to enter into with a host of countries and regional associations. It has already concluded a framework agreement with the Gulf Cooperation Council (GCC) as a prelude to an FTA as well as a similar agreement with Thailand and with the BIMSTEC (Bangladesh-India-Myanmar-Singapore-Thailand) group. The Ministry is believed to be keen to enter into more such agreements to ensure that India is not left out as more countries are concluding regional and bilateral trade associations.

WTO issues to dominate

With WTO issues having come to dominate the global trade scenario, the policy will focus on the need to prepare a viable strategy to meet the challenges of international development after the Doha round negotiations are completed. As the framework agreement of the Doha round has just been concluded, the Commerce Ministry will now have to consider the approach to be taken during negotiations in key areas like agriculture, services and industrial tariffs.

The foreign trade policy, which replaces the annual Exim policy, is being announced five months after the usual date of April 1 owing to the intervening elections. At the same time, there is considerable continuity in this area with the UPA Government having adopted largely the same policy on foreign trade as the previous Government. Even in WTO negotiations, Mr. Kamal Nath has continued to support the coalitions built by the previous regime.

Printer friendly page
Send this article to Friends by E-Mail

Business