The Government today announced a fresh package of incentives for exporters to boost shipments from the country as merchandise exports declined 1.76 per cent to $300.57 billion in 2012-13 fiscal compared with $304 billion in the previous year.
Foreign trade policy
The main attractions of the Foreign Trade Policy for 2013-14 include extension of zero duty Export Promotion Capital Goods (EPCG) scheme that allows duty free import of capital goods to all sectors, widening the interest subvention scheme for the engineering and textiles sector, allowing use of duty credit scrip beyond duty free imports, and permitting the transferability of status holder incentive scheme.
More operational flexibility was also given to Special Economic Zones (SEZs) with the Government reducing the area requirement by half for all SEZs and doing away with the minimum area requirement for IT SEZs.
“We have announced this policy after extensive consultation with industry and exporters. We will carry out a review in the month of October and announce more measures if required,” Commerce & Industry Minister Anand Sharma said after announcing the FTP.
Revenue outgo
The Minister, however, refused to make an estimate of the revenue outgo for the schemes stating that it all depended on how much was exported by the qualifying sectors.
Sharma said that extension of zero duty EPCG scheme to all sectors will promote the technology intensity of exports. Textile exporters benefiting from the Technology Upgradation Funds Scheme will also be allowed to avail themselves of the EPCG scheme.
The FTP did not extend any fiscal sop to the SEZ units, but it would now be much easier for the zones to come up.
The minimum area requirement for multi-product SEZs has come down to 500 hectares from 1,000 hectares while sector-specific SEZs will be allowed to come up in an area of 50 hectares, down from 100 hectares.
There would be no minimum land requirement for setting up IT/ITES SEZ and builders will have to meet only the minimum built up area requirement.
Exit policy
An exit policy permitting transfer of ownership of SEZ units, including sale, has also been introduced in the SEZ Framework.
Moreover, sector-specific SEZs have been allowed to bring in an additional sector for each contiguous (continuous) 50 hectare parcel of land. This means that a sector-specific SEZ can go beyond its particular sector if it manages to get more land.
Minimum alternate tax
SEZ developers and units are, however, disappointed that the Government has not exempted them from minimum alternate tax (MAT). The SEZ units have not been made eligible for the focus product and the focus market schemes are not available to domestic exporters.
Interest subvention
While the discount rate of 2 per cent was not enhanced in the interest subvention scheme, the Government has extended the scheme up to March 31, 2014 and included 134 sub-sectors of engineering in addition to handicrafts, handlooms, carpets, garments, processed food, sports goods and toys. Small and medium enterprise sector, too, would continue to get the benefit.
Focus market scheme
Norway has been added as a new market under the Focus Market Scheme, which gives exporters a 2 per cent duty credit (that can be transferred for money) taking the total number of markets to 125.
Exports to Venezuela will now be eligible for the Special Focus Market Scheme that allows a duty credit of 4 per cent taking the number of such markets to 50.
As many as 47 new items have been added to the Market Linked Focus Product Scheme and the benefits for exporting textile to the EU and the US have been extended by another year.