Sharma opens extension counter

Extensions seemed to be the buzzword at Vigyan Bhawan, where Commerce and Industry Minister Anand Sharma announced amendments to the Foreign Trade Policy 2009-14.

The minister’s 30-minute speech was bereft of announcement of new schemes. But, it did provide an extension to a host of schemes, including the most popular one — Duty Entitlement Passbook scheme (DEPB) — a trend that has continued for nearly half-a-decade now.

Though the commerce minister said this was the last extension he had managed to get from the finance ministry, privately, officials said, the scheme could go on until the Goods and Services Tax (GST) regime was rolled out. GST was to be implemented from April 2011, but it has now been deferred further. A date, however, has not been fixed yet. In case of DEPB, the latest extension is for six months and the scheme is now valid up to June 2011.

In case of the zero-duty Export Promotion Capital Goods scheme, the validity has been extended by a year to March 2012. Similarly, the Status Holder Incentive Scheme (SHIS), which was to end in March 2011, will now be operational for another 12 months. Benefits for export of readymade garments to the European Union, under the Market-Linked Focused Products Scrips scheme, will be available for another six months up to March 2011.

In addition, some of the sectors such as engineering goods and electronics, textiles, leather, handloom, handicrafts, toys and sports goods, where revival in export growth has been slow, came in for special focus by way of increasing the coverage of the existing schemes.

So, some of the engineering items, finished leather, tea, rubber products, among others, will now be entitled to bonus incentives.

Similarly, textiles, leather manufactures and jute products will get 2 per cent interest subsidy during the current financial year to make these more competitive in the global market. So far, the facility had been meant for exporters of handicrafts, handlooms, carpets and small and medium enterprises.

In case of the zero-duty EPCG scheme, certain chemicals, rubber, marine products, sports goods, toys and certain engineering products would also be covered now. The scheme, announced last August, focuses on aiding technological upgrade.

There also are some new towns of export excellence — Agra (for leather goods), Barmer in Rajasthan (handicrafts) and Bhiwandi in Maharashtra (textiles). This status would entitle them to certain benefits.

Though Sharma said the government would try to reduce transaction cost by at least 40 per cent in the coming days, he made a small beginning by announcing some procedural simplifications.

In 2009-10, estimated revenue loss on account of various export promotion schemes was Rs 43,622 crore, compared with Rs 49,053 crore in 2008-09.

Today’s measures are expected to result in a tax expenditure of Rs 1,050 crore. But, with almost five months gone, the cost will be around Rs 600 crore in 2010-11.