Exports, SEZs to get boost as government announces incentives
Seeking to boost exports which slipped 1.76 percent in 2012-13, government on Thursday unveiled a slew of incentives for exporters and announced a package to revive special economic zones (SEZs).
New Delhi: Seeking to boost exports which slipped 1.76 percent in 2012-13, government on Thursday unveiled a slew of incentives for exporters and announced a package to revive special economic zones (SEZs).
In annual supplement to the Foreign Trade Policy (FTP), announced by Commerce and Industry Minister Anand Sharma, the emphasis was on incentivising labour-intensive sectors like textiles, engineering and handloom.
The measures include extension of the popular EPCG scheme to all sectors, easing of land norms to set up SEZs and inclusion of more products and destinations under different schemes like Focus Product and Focus Market Schemes.
The Export Promotion Capital Goods (EPCG) scheme, which allows exporters to import capital goods at zero duty, would be extended beyond March.
"We have decided not only to extend the zero duty EPCG scheme beyond March 2013, but also merge it with 3 percent EPCG scheme. Now, the zero duty EPCG benefit will be available to all sectors," Sharma said.
Government has also decided to further widen the interest subvention scheme to include items from engineering and textile sector. These sectors would be able to avail benefit during the period from May 2013 to March 2014.
At present, 2 percent interest subsidy was available to certain specific sectors like handicrafts and carpets.
The steps, which come in the backdrop of exports falling to USD 300.6 billion in 2012-13 from USD 306 billion in the previous fiscal, will go a long way in providing much needed support for exports, Sharma
The industry, however, was divided in its response to the policy, with the apex exporters body FIEO saying that the minister did not come out with any big-ticket announcement.
"It was a routine policy. It has no bold or big-ticket announcements," said R Ahmed, President of the FIEO, which has been pressing for a USD 2 billion Export Development Fund.
On the other hand, export bodies like AEPC and EEPC welcomed the policy, saying it would give a boost to textiles and engineering exports.
Observing that giving a boost to exports is necessary to bridge trade and current account deficits (CAD), Sharma said his ministry has set up another committee to suggest steps to further bring down transactions cost for exporters.
While the trade deficit has touched an all time high of USD 191 billion in 2012-13, CAD soared to a historic level of 6.7 percent of the GDP at the quarter ended December 2012.
The minister further said that he would impress upon the RBI, which is scheduled to announce the monetary policy on May 3, to provide affordable credit to exporters and the industry.
As regards the SEZ scheme, Sharma said, the minimum land area requirement for setting up such zones has been reduced to half and there would be no ceiling for IT and ITeS SEZs.
"We have taken note of the fact that there are acute difficulties in aggregating large tracks of uncultivable land which is vacant and contiguous and we have decided to reduce the minimum land area requirement by half for different categories of SEZs.
"...There would be no minimum land requirement for setting up IT/ITeS SEZs and only minimum built up area criteria would be needed to be met by SEZ developer," he said.
On demands of a exit policy for SEZs, Sharma said it has been decided to allow transfer of ownership and sale of units.
Granting a relief to close cases where companies had defaulted in fulfilling export obligations, Sharma said, "It has been decided to allow a facility to close such cases after payment of required duty, along with applicable interest."
The duty and interest have to be paid within a limited period of six months from the date of notification of this scheme. The total payment shall not exceed two times the duty saved amount on default in export obligation.
In order to encourage manufacturing activity in Jammu & Kashmir, it has been decided to reduce the specific export obligation to 25 percent of the normal export obligation.
Further to boost service exports, government allowed hotels and tour operators to import cars and SUVs under the Served from India Scheme (SFIS).
Sharma also said that government has decided that even an exporter who has obtained benefits under TUFS will be eligible for benefits zero duty EPCG scheme.