Special Economic Zones to lead growth

in a bid to enable india inc to compete effectively in the increasingly-competitive international market and boost sagging exports, the government has announced a bouquet of concessions for exporters, focusing sharply on special economic zones, industrial clusters, agri exports, gems & jewellery, hardware and reduction of transaction costs. contained in the export-import policy for 2002-07, the concessions are aimed at pushing up export growth to 12 per cent a year as compared to less than 1.56 per cent during april-january this financial year. exporters will now have 360 days to bring in their foreign exchange remittances as compared to the earlier limit of 180 days. moreover, they would also be allowed to retain the entire amount held in their exchange earner foreign currency accounts. while popular export-promotion tools like the duty entitlement pass book scheme and the export promotion capital goods (epcg) schemes have been retained despite resistance from within the government, new incentives have been granted to the cottage sector, handicrafts, chemicals & pharmaceuticals, textiles and leather industries. contrary to apprehensions among the export community, the depb and epcg schemes have not only been retained but also made more flexible. the time granted for fulfilment of export obligation has been increased to 12 years in the case of epcg imports worth more than rs.100 crore. “let me now end the suspense and say that depb and all other schemes will continue, along with existing dispensation of not having any value caps,� commerce & industry minister murasoli maran said in his exim policy speech. the major highlight of the new long-term exim policy is the persisting effort to enable indian sezs to come on a par with international rivals. to this effect, maran said that both sez units as well as developers would be eligible for income tax concessions, in addition to total exemption from customs and excise levies. the details of the income tax exemption would be incorporated in the 2002 finance bill and announced by finance minister yashwant sinha in parliament. sezs—described as the “best of our dream projects�—would also benefit in a big way with the government deciding to treat bank branches in these zones as overseas branches free of crr, slr and priority sector lending requirements. this would help sez units as well as developers in bringing down cost of funds as overseas branches of indian banks are in a position to lend at much lower rates than those prevailing in the indian market. sez units will also have the freedom to carry out hedging in commodities, make liberal overseas investments out of their export earnings and borrow overseas without being hindered by existing regulations. ultimately, this could lead the banking sector to go in for global banking centres which can operate like offshore facilities despite their location on indian soil. maran has also scrapped import restrictions on gold and silver jewellery besides announcing removal of all restrictions on agri exports. only a handful of items like onion, jute and niger seed would be subject to quantitative restrictions on exports. transport assistance would be provided to exporters of fresh & processed fruits, vegetables, floriculture, poultry and dairy products. a separate plan is being worked out to provide similar assistance to export of rice and wheat within the provisions of the world trade organisation. this will help in exporting at least part of the growing foodgrain mountains which the government is finding difficult to handle. to tap existing industries to give a fillip to exports, maran has also launched an innovate scheme focusing on industrial clusters like tirupur (knitted hosiery), panipat (woollen blankets) and ludhiana (woollen knitwear) which have been exporting without any significant government efforts. in view of their strengths and potential, the exim policy proposes to provide them cheaper common services by allowing duty-free import of capital goods for common facilities through the epcg scheme.