Commerce ministry nervous on Kelkar proposals

The recommendations of task force on indirect taxes headed by advisor to the finance minister Dr Vijay Kelkar, to dismantle various incentiv...

The recommendations of task force on indirect taxes headed by advisor to the finance minister Dr Vijay Kelkar, to dismantle various incentive schemes for exports have given the jitters to the Commerce Ministry. The ministry has now put this on top of the agenda set for the Minister of Commerce and Industry, Arun Shourie holding the portfolio in addition to the Disinvestment Ministry to resolve as soon as he is back from Sydney.

According to a senior ministry official, the Commerce and Industry Ministry has serious reservations about the recommendations of the Kelkar recommendations especially one which talk about withdrawing incentives for exports. At a time when exports are in any case going through a slowdown because elimination of various export incentive schemes would negatively affect the pace of India’s exports.

Even the exporting community is not satisfied with the recommendations of the task force.

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The officials are of the view that at a time when push to export is also high on the agenda of the new minister, going ahead with Kelkar task force recommendations would be highly detrimental for the export growth.

The Kelkar task force has said that India has multiple schemes which are not at all necessary e.g. drawback, DEPB, Advance Licence/DEEC, DFRS, EPCG, and EOU because they create difficulties in administration and tend to be misused. Hence, multiplicity of export promotion schemes through taxes should be done away with, the report has recommended.

It has also recommended that since the general premise of the schemes is the same, the CBEC must immediately work upon consolidating the many notifications, on both customs and central excise side. The new minister is also expected to find ways to accelerate the export growth and sustain the momentum of export so that India can meet the target of 12 per cent growth in exports during the current fiscal.

During the first half of the current fiscal India’s exports grew by 13.49 per cent at $ 23,974.30 million compared to $ 21,123.85 million during the same period last year.

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Exports during September, 2002 are valued at $ 3,994.62 million which is 7.9 per cent higher than the level of $ 3,702.01 million during September, 2001.

The ministry will also be looking at the annual Exim Policy for the next fiscal 2003-04 within the five year framework for which the consultation work is expected to start very soon.