New exim policy to deregulate export sector

Participating in the meeting, FICCI president GP Goenka demanded that unrebated taxes in a WTO compatible manner should be compensated besides activating the tariff commission and devising institutional mechanism to counter barriers to market access in importing countries.

CII President Rahul Bajaj said wto compatible ways must be found to support a 20 per cent growth in exports. Handicaps facing exports in terms of infrastructure, interest rate must be ovecome.

Fieo president Navratan Samdria wanted the government to continue DEPB scheme and sought postponement of the phase-out of tax exemption under Section 80HHC until specific measures were taken to reduce the transaction cost of exports.

Chemexcil chairman Ramu Deora highlighted the problem of state government levies on inputs for export production, irrelevance of special import licence in the present context of negligible premium. Some of the participants wanted enlarging the terms of reference of the Board of Trade to focus on the employment potential of both exports and imports.

Commerce secretary PP Prabhu referred to the extensive interaction with export promotion councils in recent months said their suggestions were being given fullest consideration in finalising the exim policy.

Meanwhile, it is learnt the Centre is working out a plan to compensate the state governments for the revenue loss arising from waiver/remission of various taxes and levies on exports.

The plan that aims to involve the state governments in the country’s export effort is likely to be included in the revised export and import policy to be notified by Murasoli Maran on March 31.

The commerce ministry believes that in the absence of any motivation by the Centre, the state governments have been treating exports as a drain on their resources and therefore are unlikely to come forward with schemes to assist export promotion.

While sales tax on all exports is exempt by law, a large number of other taxes/levies are levied by various state governments which inflate the cost of export products. Similarly, octroi is levied by municipal bodies in most states. This is an uncompensated cost and the physical obstructions while administering the octroi regime lead to enormous delays in transportation of goods.

Besides, duty has been levied by the states on power that is supplied to their electricity boards. This is in addition to the high cost of power which makes Indian products uncompetitive in the global market. Some states have taken steps to waive various taxes/levies that go into export production. However, in view of the resource crunch many states will find it difficult to sustain these concessions.

Ironically, all these duties/levies can be compensated under the WTO regime. On the one hand, the Central government is struggling to retain some of the export promotion schemes at WTO, on the other, it is unable to make use of the above concessions.

Announcing the revised export and import policy on March 31, 1999, former commerce minister Ramakrishna Hegde had hinted that he was pursuing a proposal for a plan scheme involving an allocation of Rs 500 crore by way grants to the states for complementing and strengthening export infrastructure and and in particular giving a boost to agro exports.