The Hindu : Business : Board of Trade wants all tax on exports neutralised

Online edition of India's National Newspaper
Wednesday, Mar 15, 2006

Business

Business

Board of Trade wants all tax on exports neutralised

Special Correspondent

New scheme to replace DEPB for Cabinet clearance

— Photo: Sandeep Saxena

FIGURING OUT: The Union Commerce Minister, Kamal Nath, with the Chairman, Board of Trade, Kumar Mangalam Birla, at a press conference after the Board meeting in New Delhi on Tuesday.

NEW DELHI: In the run up to the annual review of the foreign trade policy, the high power Board of Trade headed by Kumar Mangalam Birla has called for neutralising of all taxes and levies on exports. Making the recommendations on various issues to the Government, it has urged that steps be taken to ease procedures and reduce taxation on the export sector.

Briefing newspersons after the meeting, Commerce and Industry Minister Kamal Nath said the Board had given certain inputs for the upcoming foreign trade policy. He said it had argued that taxes and levies should not be exported. In fact, it had described the failure to refund them as being tantamount to levying an export tax, he said.

The Board is also of the view that the four per cent countervailing duty proposed in the budget would be a major disadvantage for exporters. In this context, he said, the Government was trying to neutralise the incidence of service tax on exporters. He said the Board had set up five working groups and four sub-groups to make suggestions for the policy, which were presented to the Government at the meeting.

Mr. Nath said a new scheme to replace the Duty Entitlement Passbook scheme would be submitted for Cabinet clearance shortly. He said the government was also planning a new export incentive scheme aimed at specific products and specific markets to accelerate export growth. This was important, he felt, not only to expand markets for exports but also for generating substantial new employment opportunities in rural and semi-urban areas.

Regarding focus areas for the foreign trade policy review, he said textiles, toys, leather, gems and jewellery, sports goods, stationery and processed foods had been identified as priority areas. In addition, he said steps would be taken to enlarge the scope of the Vishesh Krishi Upaj Yojna, a scheme introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value added products.

Exports up 12 p.c.

Even as exports are set to touch the $100-billion-mark this year, the trade deficit has widened to $37.57 billion during April to February 2005-06. This is nearly $13 billion higher than the deficit recorded in the same months last year.

The rapidly growing trade gap is largely due to a 33 per cent spurt in imports on the back of an unremitting rise in global oil prices. Exports have grown much slower at 26.34 per cent during the eleven month period, with February recording a modest 12.3 per cent increase. Total exports during the month are pegged at $7.8 billion compared to $6.9 billion in the same month last year.

Cumulative exports during the first eleven months of the current fiscal are estimated at $88.7 billion, 26.34 per cent higher than the $70.2 billion exports achieved during April-February 2004-05. The latest data released here on Tuesday show that imports during February were $11.04 billion as against $9.09 billion last year in the same month. The overall imports till February have risen by 33 per cent to $126.33 billion from $94.99 billion in the same period the last fiscal. Oil imports have surged by 49.35 per cent to $37.57 billion, while non-oil imports shot up by 26.65 per cent to $86.67 billion from $68.43 billion a year ago.

Commerce and Industry Minister Kamal Nath, however, maintained that the rising trade deficit was largely due to oil imports. He said non-oil imports were comparable to export growth. Besides, he felt that imports are helping the manufacturing sector drive exports to global markets.

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