India liberalises trade, to promote services export

NEW DELHI: India liberalised tradecontrols further on Monday, scrapping import curbs on a host of sectors fromspices to animal products, and said it would promote export services to exploitits big pool of skilled workers.
In a watershed Exim policy, the governmentannounced a major package for exports of services, special focus on high growthsectors like textiles, auto, gems and jewellery and dismantled restrictions onexport of five items like paddy, rare earth and cotton linters.
Unveilingthe policy, Commerce Minister Arun Jaitely simplified procedures, made popularEPCG scheme more flexible and attractive and gave new thrust to agricultureexports.
This would be for the first time there would be simultaneousnotifications of announcements by DGFT and CBEC to remove harassment toexporters.
Besides giving special focus on potential high growth sectorslike drugs and pharmaceuticals, electronics hardware, Jaitley announceddevelopment of ten new export clusters and steps to facilitate corporateinvestment to boost agro-products.
The new look EXIM policy aimed atbuilding on areas of India''s core competence gives major boost to health care,entertainment, professional services and tourism in a bid to give massive thrustto export of services.
Aiming to achieve 80 billion dollar annual exportsby 2002 from the present level of 50 billion dollars, the policy seeks to reducetransaction costs, introduce annual advance licence for status holders anddiversify export markets by focussing on CIS countries from April one, andenlarging growing African market by covering 24 countries.
On servicesexports, Jaitely said apart from software, a host of other services providedunprecedented opportunities in global trade and with abundant skilled manpowerIndia was "uniquely" placed to take full advantge of growing opportunities ofservices exports, which was the engine of economic growth.
"We are,therefore, taking a bold initiative in not only recognising the importance ofservice exports but also introducing a scheme for forex promotion," hesaid.
Admitting that "we have not even made beginning in the promotion ofservices sector, excepting software, Jaitley said the policies announced todaywould help particularly sectors like health, for which Finance Minister (JaswantSingh) has given strong signal to India to emerge as major destination forhealth services.
Announcing a package for entertainment industry, Jaitleysaid this sector, which was "singularly handicapped" by lack of investment,would now be promoted by encouraging venture capital funds into thesector.
Suitable tax incentives would be given to the venture capitalists,in consultation with the Finance Ministry, he said, adding that asector-specific working group would be set up for this purpose.
Terming theagriculture exports as an area of India''s core competence, he said the fixationof Duty Entitlement Passbook Scheme (DEPB) rates for selected agro productswould take into account the costs of inputs like fertilisers, seeds andpesticides would increase the productivity, benefiting the farmers.
Apartfrom removing quantitative restrictions on five items including paddy (exceptbasmati), cotton linters, rare earths and silk cocoons, Jaitley said agri exportzones would be encouraged across the country with as many as 45 already beennotified.
Referring to the small-scale sector, Jaitley announced a seriesof steps to make the EPCG scheme more flexible and attractive so that the SSIscould be set up and their manufacturing base expanded.
These include importof capital goods for pre and post production facilities, rationalisation ofexport obligations, allowing import of spares and doing away with existingconditions of imposing additional export obligation of 50 per cent for productsin the higher value chain.
Besides, the new policy provides for fulfilmentof export obligations and allows import of capital goods upto ten years oldunder the EPCG scheme and counts royalty payments from abroad for discharge ofexport obligations under the scheme.
Outlining the package of incentivesfor fast growing "status holders", Jaitley said a duty-free entitlement would begiven to them for import of capital goods, spares, office equipment andconsummables.
"This would be available to the status holders achieving agrowth rate of 25 per cent or more in the current year with a minimum exportperformance of Rs 25 crore," he said.
In services sector, Jaitley saidduty-free facilities would be provided for those industries earning a minimumforeign exchange of Rs 10 lakhs.
He said the duty-free entitlement shouldbe 10 per cent of the average foreign exchange earned in the preceding threelicensing years.
Unveiling incentives for export clusters, he said therewould be upgradation of infrastructure in the existing clusters and industriallocations to improve their overall competitiveness.
To encourage therevival of sick units, the new policy extends the obligation period to thoseunits covered under the BIFR rehabilitation scheme.
"This facility shallalso be available to units outside the purview of BIFR but operating under staterehabilitation programme," Jaitley said.
It also removed QRs on import of69 items covering animal products, vegetables and spices, antibiotics andfilms.
He said agriculture/horticulture processing EOUs would now beallowed to provide inputs and equipment to contract farmers in DTA (DomesticTariff Area) to promote production of goods as per the requirement of importingcountries.
"This is expected to integrate the production and the processingand help in promoting agro exports," he said.
Foreign bound passengerswould now be allowed to take goods from EOUs to promote trade, tourism andexports, Jaitley said, adding the value of capital good imported by EOUs wouldbe amortised "uniformly" for 10 years.