Business IdeasWorld is beyond US, EU: Trade policy to exporters
The government today sought to bolster exporters, hit hard by recession in the West, by extending various tax sops and special incentives on trade with markets in Asia and Africa, in its Foreign Trade Policy.
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The policy, coming in the backdrop of a 30 per cent contraction in exports in the last 10 months, identified 26 new markets for trade that would be eligible for sops. These include 16 in Latin America and 10 in Asia and Oceania.
At present, India"s $168 billion exports are highly concentrated in Europe (36 per cent) and the US (18 per cent) and Japan (16 per cent) and these are the worst hit by the biggest financial crisis since the 1930s.
Click to read Commerce & Industry minister"s speech on Foreign Trade Policy.
"We have taken a conscious view to expand and diversify our export markets, especially in the emerging markets of Africa, Latin America, Oceania and CIS countries," Commerce and Industry Minister Anand Sharma said, while releasing the five-year policy that will be reviewed after two years.
The government would offset disadvantages that exporters may face in these new markets.
While the government would not "hazard a guess" for 2008-09, it has set a target of $200 billion for 2010-11.
The policy also sought to help gems and jewellery sector, one of the worst hit, by allowing duty drawback on exports.
Handloom and handicrafts would be helped under the Market Development Scheme, while the government also announced the continuation of the DEPB scheme till December 2010. Exporters bodies like FIEO welcomed the policy.
Taking a realistic view of the grim forecast of global trade that is likely to decline by 9 per cent in 2009, the policy aims at achieving an annual export growth rate of 15 per cent. However, that could happen only in the next fiscal, senior officials in the Commerce Ministry said.
In the short term, the relief measures include providing dollar credit to exporters that will be overseen by a high level committee, comprising Finance Secretary, Commerce Secretary and the Indian Banks Association.
To insulate the small and medium scale exporters who are unable to seek expensive legal help for foreign markets, a Directorate of Trade Remedy Measures would be set up.
Sharma said while India has not been affected by the global meltdown as much as the western economies, the protectionist measures by several countries have aggravated the problem.
The policy, the first major external trade blueprint of the UPA government in its second term, continues with the interest subsidy for exporters of two per cent for pre-shipment credit and income tax exemption to 100 per cent Export Oriented Units (EOUs) for till the end of next fiscal.
While, several business chambers and exporters bodies welcomed these measures, some found the steps were inadequate.
"The policy steps are inadequate to address the grave situation that the sector is facing," a head of a leading export promotion council said.