FTP gives more scope to exporters
Excerpts from media interaction with Commerce and Industry Minister Kamal Nath after unveiling the FTP.
By Priyanka Kumari, INDIATIMES NEWS NETWORK |
India has come a long way in developing its export capabilities and enhancing the global competitiveness. The focus of import substitution and reduction in trade gap is fast replacing the encouraging measures to increase export possibilities now. With one -third of our GDP coming from foreign trade, the trade today has reached a record mark of $125 billion. This is despite the rise in global oil prices and appreciation of rupee.
In order to build capacities for volume production, modernisation of industrial units is essential. Product diversification and value addition will also give India an edge. Commerce and Industry Minister Kamal Nath announced the annual supplement of the Foreign Trade Policy (2004-09). Excerpts from media interaction with Kamal Nath after unveiling the FTP:
Q. What will be the impact of rising rupee on trade target of $160 bn that you have fixed for this fiscal?
We have taken into account the recent developments of the rupee rising to a nine-year high. This is a concern but the resilience of Indian exporters and their entrepreneurship makes us believe that the country will achieve the targets in the given timeframe.
We have consulted the exporters in various sectors and also the export promotion councils for different products and then fixed the target. Another meeting with the export promotion councils is fixed next week to review the situation.
At present banks earmark 15 per cent of their lending to exporters. Of this, at least half should be reserved for small and medium enterprises. The concession credit will boost capacity building and modernisation of the units.
The export is envisaged to rise to $200 billion in 2008-09.
Q. Will there be any revenue loss to the government by exempting services exports from service tax?
Taxes are not meant to be exported. This is applicable worldwide. There will be no revenue loss to the government as it is not a payment but a refund procedure. All levies and taxes will be remitted to the exporters. It will make exports more competitive in comparison to other countries.
Q. Which countries or export markets are in focus to achieve the target?
The focus is not only to increase the items in the export basket but also reach out to the upcoming new markets with increasing purchasing powers. There are 16 new countries among which ten are from the CIS countries.
There is no fixed target for the SAARC region but we cannot undermine the growing developments and increasing purchasing power of this region.
In order to build capacities for volume production, modernisation of industrial units is essential. Product diversification and value addition will also give India an edge. Commerce and Industry Minister Kamal Nath announced the annual supplement of the Foreign Trade Policy (2004-09). Excerpts from media interaction with Kamal Nath after unveiling the FTP:
Q. What will be the impact of rising rupee on trade target of $160 bn that you have fixed for this fiscal?
We have taken into account the recent developments of the rupee rising to a nine-year high. This is a concern but the resilience of Indian exporters and their entrepreneurship makes us believe that the country will achieve the targets in the given timeframe.
We have consulted the exporters in various sectors and also the export promotion councils for different products and then fixed the target. Another meeting with the export promotion councils is fixed next week to review the situation.
At present banks earmark 15 per cent of their lending to exporters. Of this, at least half should be reserved for small and medium enterprises. The concession credit will boost capacity building and modernisation of the units.
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The export is envisaged to rise to $200 billion in 2008-09.
Q. Will there be any revenue loss to the government by exempting services exports from service tax?
Taxes are not meant to be exported. This is applicable worldwide. There will be no revenue loss to the government as it is not a payment but a refund procedure. All levies and taxes will be remitted to the exporters. It will make exports more competitive in comparison to other countries.
Q. Which countries or export markets are in focus to achieve the target?
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The focus is not only to increase the items in the export basket but also reach out to the upcoming new markets with increasing purchasing powers. There are 16 new countries among which ten are from the CIS countries.
There is no fixed target for the SAARC region but we cannot undermine the growing developments and increasing purchasing power of this region.
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Q. How do you see the trade deficit?
With a faster growth in the merchandising exports in comparison to exports of goods, there is a trade deficit. But with exports of services, the position looks improved as the trade gap in goods & services becomes smaller and looks manageable.
The imports of goods among the non-oil imports category is $124.10 billion in the total of 187 billion, whereas the exports of services included $71.6 billion in a total of $ 196.23 billion.
There has been a steady increase in the forex and there are various other quarters of income too.
Q. What products are focused in the annual supplement to the Foreign Trade policy?
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The priority rests on rural India with increased scope to tap the agro-sector exports markets. The emphasis is on improving product diversification and production of marketable surpluses.
The scope of Vishesh Krishi and Gram Udyog Yojna is expanded to include exports of value-added variants of agricultural and forest products. A new scheme for incentivising agro processing has been introduced with status holders being rewarded with duty credit scrips equal to 10% of the value of exports, provided they are them for duty redemption on imports of cold storage etc.
There will be duty free import of tools and machineries for Jems and Jewellery sector.
China is into mass production and volume exports, so high technology sector becomes very important thrust area for India. To encourage high technology exports, the scheme is to provide 10% duty free benefit on incremental exports, subject to Rs 15 cr for each company.
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Q. Which other sectors or areas do you think India has a scope?
There is increasing competition in the IT and ITeS sector form countries like China and others. The growing and upcoming market is the Knowledge Process Outsourcing (KPO) and Engineering Process Outsourcing (EPO) which stands at around 2-3 % of global expenditure. This is expected to increase up to 9-10% by 2015 and India can aspire to capture around 20- 25% of the global market share.
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Q. How do you see SEZs contributing to the growth momentum with land acquisitions cap on land areas?
Special Economic Zones are industrial clusters with infrastructures in place largely meant for export. SEZs cannot come on air or water, they have to be built on land and the government is thinking properly about the rehabilitation programmes.
Land acquisition are also there in case of setting up of industries, so the issue is not on the land but how to develop them so that they can be real engines of growth. It is expected that an additional investment of over s 40,000 and 10 lakh new jobs will be created in SEZs.
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