Ho-Hum

If the businessmen who had assembled on Easter Sunday morning to listen to the commerce minister unveil his exim policy for the next five years, were noticeably lukewarm in their response to Mr Maran's package of announcements, the minister should not have been surprised.

He must have known that he was not about to set the Yamuna on fire with his pronouncements. The commerce minister, therefore, is operating very strictly on the margin, and not just because many of his announcements can have effect only if approved by the finance ministry and Reserve Bank of India.

Why these clearances could not have been obtained before Sunday is not clear, but in the given situation, even what little mileage Mr Maran could get for his "new" policy has been denied to him.

Nevertheless, there are elements in the package that must be welcomed, including lifting of restrictions on agricultural exports and encouraging the export of gems and jewellery by abolishing the duty on the import of diamond roughs. The minister has also sought to push ahead with the development of the special economic zones, though these have made slow progress so far.

The introduction of the new eight-digit classification of trade items, to be adopted by both customs and those in charge of trade statistics, is a blessing as it will reduce classification disputes. And with regard to procedural improvements, same-day licensing is promised in all regional centres, while stock in trade will not be seized in the event of a dispute.  There is also an easing of financial curbs, because all export earnings can once again be held as foreign exchange in the special export accounts.

But in order to understand the limited canvas on which Mr Maran is painting, consider what he offers to the cottage sector and to handicrafts (which is commonly seen as offering enormous export potential): Rs 5 crore, or a million US dollars, under the market access initiative (MAI) if the exports come under the Khadi and Village Industries Commission; access from MAI's funds for developing websites; some minor concessions under the export promotion capital goods (EPCG) scheme; export house status at a lower export threshold; and duty-free imports up to 3 per cent of the value of exports.

What is on offer for small-scale units (which account for a substantial chunk of the country's exports) is no more impressive: EPCG benefit for common service providers in cluster towns like Tirupur; MAI funds for associations of small-scale units; central aid for meeting infrastructure gaps; and export house status at a lower export threshold. As for the booming sector of service exports, the policy has virtually nothing to say.

Nor is there enough coming through to suggest that the government is making all its schemes compliant with the rules of the World Trade Organisation. Indeed, there is some doubt as to whether the transport subsidy promised for agricultural exports is fully WTO-compliant, though expert opinion suggests that it can be structured so as to not attract WTO notice.

More disappointing is the absence of any real change in the duty entitlement passbook scheme, despite the strictures passed by the comptroller and auditor-general, who found large-scale misuse of the scheme's provisions. The idea has long been acknowledged as sound in concept; surely better implementation should be possible.