Commerce ministry readies ground for next trade policy

Exporters are scheduled to meet DGFT officials next week.

About a month after releasing an interim foreign trade policy, the commerce ministry has started preparing a full-fledged draft of guidelines and benefits for exporters. It will be released after the new government takes over in mid-2009.

The Directorate General of Foreign Trade (DGFT), under the Department of Commerce, which is responsible for formulating India’s trade policy, has started consultations with exporters in this regard.

“When the new government takes over, it may like to announce sops for exporters through the trade policy. The consultations will help the commerce department to be ready with the recommendations for the new government,” said a government official in the know.

While the representatives of the Export Promotion Council for EoUs and SEZs (EPCES) have already met DGFT officials, the exporters are scheduled to meet in the coming week. Exporters are demanding additional fiscal benefits as well as simplification of procedures.

The meetings comes in the backdrop of four months of contraction in exports as major economies like the US, Europe and Japan are experiencing recession. Government officials believe that overseas sales of Indian goods is likely to post a near-flat growth in 2009-10.

After looking into the demands of various export organisations, the commerce ministry will prepare a list of implementable proposals and discuss these with its finance counterpart. Initiating the process much before the new government assumes power will enable the new establishment to roll out its trade policy fast, say officials.

The commerce ministry had released an interim trade policy on February 26 which focused on procedural simplification. Due to the impending general elections, the ministry did not announce a full-fledged policy. Only one of the measures involved a fiscal allocation, of Rs 325 crore.

The government has already announced three fiscal stimulus packages since December 2008 to boost exports. One of the packages included interest subsidy for exporters.

“Textile exporters will be asking for benefits, which have not been given in any fiscal stimulus package. For example, we want additional duty reimbursements by restoring the duty drawback rates to the levels seen in September 2008,” said DK Nair, secretary general of Confederation of Indian Textile Industry.

Exporters based in export-oriented units (EoUs) want their tax benefits to continue beyond March 31, 2010. “Keeping in mind the contribution made to the manufacturing sector and to exports by EOUs, there is an urgent need to extend the income tax benefits under Section 10B of the Income Tax Act for three years,” said LB Singhal, director general, EPCES.

Leather exporters, who are meeting DGFT officials on Wednesday, say the export benefits that have been announced by the government have not meant much. “We will need additional support from the government to compete with our Chinese rivals in the western markets,” said Habib Hussein, chairman, Engineering Export Promotion Council.