Ficci Seeks Exim Policy Changes To Boost Exports

The Federation of Indian Chambers of Commerce & Industry (Ficci) has called for modifications in the Export-Import Policy to enhance exports and establish an organic link between imports and exports.

According to the industry chamber, the current Exim policy does not provide any tangible incentive to those using indigenous raw materials and exporting value-added or labour-intensive items.

There ought to be a differential treatment in progressive form to those exporting high-tech and value-added products and using indigenous materials. This will reduce import intensity of exports and promote growth of domestic industry, it says.

Ficci says that so far the government has not taken full advantage of its buying power to strengthen the export base and augment foreign exchange earnings. Besides, counter trade provides an important instrument for augmenting exports.

 

Changes are needed in the Exim policy to allow the exporting enterprises to import even canalised items along with the canalising agencies, it says, adding that even a portion of items like petroleum products should be earmarked for counter trade.

The transaction time and cost is very high on export business. The bottlenecks largely emanate from complicated and time consuming procedures. As a consequence, foreign buyers reportedly insist on getting a lower price than the prevalent rate from the Indian exports and want delivery in less than the normal permissible period, says Ficci.

On the other hand, government agencies, particularly the revenue department and customs, create stringent rules, a large volume of paper work and documentation. Unless the cost of time is realised and reduced, exporters will be at a comparative disadvantage vis-a-vis their competitors, says the chamber.

Ficci has also suggested extending more flexibility to EEFC account holders. The rate of retention of forex earnings should be stepped up and its use widened. In fact, it should be left to the discretion of the account holder. At present, EEFC account holders in many cases do not earn interest as they are required to keep the balance in current account, says the chamber.

To facilitate competitive production and exports, Ficci states that commercial banks should calculate the interest on working capital borrowings in rupees after taking into account the credit balance in EEFC account, where both the accounts are with the same bank.