The Hindu : Business : New trade policy: a bold initiative, says federation chief

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Wednesday, Sep 01, 2004

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Business

New trade policy: a bold initiative, says federation chief

By Our Special Correspondent

CHENNAI, AUG. 31. The Federation of Indian Export Organisations (FIEO) has described the national foreign trade policy announced today as "both refreshing and challenging to exporters".

The President of the federation, Rafeeque Ahmed, commended the "bold sector-specific initiatives" in respect of agriculture, handicraft, handloom, leather and gems and jewellery to boost both exports and employment. He also welcomed the increase in the duty-free entitlement to 5 per cent from 3 per cent for garments and handicrafts. This, he said, would encourage exporters to use quality trimming and embellishments to move up the value chain. Introduction of a duty-free entitlement scheme for fruits, vegetables, flowers, minor forest produce and their value added products would help these sectors become competitive. Transferability of the duty-free licence would enable small exporters to avail themselves of the benefits of the scheme. However, more encouragement should have been given to processed products.

Permission for import of gold of 18 carat and above and increasing the duty-free limit for import of consumer goods from 1 per cent to 2 per cent would promote export of plain and studded gold jewellery, which at present accounted for only one-fifth of the total gem and jewellery exports.

Lowering of the threshold for status holders and grant of double weightage to tiny/cottage/SSI/handicraft handloom exports, products manufactured in the north-east and Jammu and Kashmir, agro and allied and service sectors would help SMEs become status holders. Reduction in the limit under the Target Plus scheme for status to Rs. 10 crores, as suggested by the FIEO, Mr. Ahmed said, would lead to expansion of the export base. The reduction in the incremental growth condition to 20 per cent from 25 per cent would directly help eligible exporters to cut their cost of production.

Other major features commended by the FIEO President are: removal of restrictions on import of second-hand machinery, zero duty EPCG scheme for the agricultural sector and allowing storage and distribution facility for capital goods to reduce post-production costs.

Continuance of the DEPB scheme should benefit all exporters, particularly those in the textile and steel sectors. Doing away with the requirement of bank guarantee should bring relief to a large number of exporters, besides reducing the transaction cost, he said. The facility given for invoicing in Indian rupees for realisation against Vostro accounts of non-resident banks should safeguard Indian exporters against foreign exchange fluctuations, particularly when the rupee appreciated.

Leather towns to benefit

The Council for Leather Exports (CLE) has hailed the inclusion of a package of incentives for the leather sector along lines suggested by it in the national foreign trade policy announced on Tuesday.

In a statement, S. S. Kumar, Chairman of the council, also welcomed the new norms for "towns of export excellence" which would enable leather clusters to maximise their potential for both export and employment generation.

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