Exporters fret as govt cancels incentive

NEW DELHI: Exporters of iron ore, cereals, sugar and petroleum products are on the warpath as the government has withdrawn these products from the ���target plus��� scheme which provides additional incentives for incremental exports.

At least a dozen rice exporters, including large players like Shivnath Rai Harnarain, which is known for the Shrilalmahal brand and Satnam Overseas (Kohinoor brand), are among those who have urged the government to retain cereals in the ���target plus��� scheme. Similar representations are also pouring in from exporters of sugar, iron ore and petroleum products.

Exporters are upset since they have been excluded from the ���target plus��� scheme with retrospective effect. The incentive has been withdrawn with effect from April ���05, said Delhi Exporters Association (DEA) president SP Agarwal. ���This is not fair to exporters who have concluded deals with the promised incentive in mind.

A number of exporters have already sent their shipments and many other orders have to be honoured. The withdrawal with retrospective effect would only lead to losses on these deals,��� he told ET. The incentives promised under the scheme are quite attractive. For a 20-25% incremental increase in exports, the scheme offers a 5% import entitlement on the incremental turnover. This is over and above the normal entitlements available under other exports windows.

In the case of 25-100% incremental exports, the entitlement is even more attractive at 10% of the incremental turnover. If an exporter���s business more than doubles, then the additional entitlement goes up to 15% of the incremental turnover.

The revenue department had objected to the scheme due to the huge revenue outgo estimated. Diamonds were taken out of the scheme following charges of abuse of the ���target plus��� scheme to garner illegitimate incentives. Now, four other categories of items have been excluded from the exports window.

Interestingly, there has been a huge increase in petroleum exports, while exports of iron ore have been booming due to sustained Chinese demand. Sugar exports are also taking off, while India has been consistently maintaining basmati exports.

DEA has already written to commerce and industry minister Kamal Nath about the impact of the move, Mr Agarwal said. ���Even if an incentive is removed, it should not be done with retrospective effect,��� he added. The commerce and industry ministry and the Directorate General of Foreign Trade (DGFT) have also been petitioned by exporters.

���How can exporters trust the government on future schemes?��� an exporter remarked. Such moves only create panic among exporters, he added. The ���target plus��� scheme was introduced by the NDA government, but implemented by the UPA regime. The primary aim of the scheme is to urge exporters to go in for a big jump in exports.

The revenue department, however, has been arguing that companies are ���buying��� exports to show big incremental growth in their exports turnover.