Exim Policy to streamline DEPB, EPCG

Enthused by over 20 per cent export growth this year, the Exim Policy to be unveiled on March 31 will contain far reaching measures to encourage exports of textiles and gems and jwellery besides rationalisation of popular duty entitlement passbook and export promotion capital goods schemes.

This would be for the first time that the government has decided not to delay Exim Policy notifications pertaining to duties following an assurance from the finance ministry. The notifications were usually delayed by three to six months putting exporters into difficulty.

Apart from incentives to special economic zones, the Policy is likely to provide incentives to services exports including institutional arrangements for hospitality, healthcare, software and education sectors.

The merchandise exports is expected to touch $50 billion this year and services sector including software and Indian films accounted for an additional $25 billion.

Apart from simplification of DEPB, the Exim Policy is likely to align the rates in line with the reduction of customs duty in the budget this year.

The Kelkar Panel had recommended scrapping of DEPB scheme by 2005 with the implementation of value added tax system in the country. But the government is likely to continue with the scheme for a while to provide a cushion to the exporters.             

The European Union has objected to the DEPB scheme saying it was an export subsidy which was not compatible with the World Trade Organisation rules. But the government has calirified that the scheme is not an export subsidy and that it was only a compensation to the duty paid which was permissible under the WTO.

As part of its rationalisation and simplification drive, government has already announced excise duty norms for textile sector foregoing registration for units doing job work for others.

While stressing on rationalisation of procedures, the government is also likely to give some reprieve to the exporting community in the wake of Iraq war.

Currently, Indo-Iraq trade is to the tune of Rs 983 crore (Rs 9.83 billion) which would be affected directly apart from higher costs of oil shipments and war surcharges. The Exim Policy is likely to announce measures to minimise war impact.

The Policy is expected to address the problem of non-tariff barriers faced by domestic exporters in overseas markets.

With a bill on Special Economic Zones likely to be introduced in Parliament, the Policy will unfold incentives apart from streamlining of existing ones.

The Policy may seek to address the concerns of high income tax rates on overseas banking units in special economic zones, as also accept exporters' demand of treating units operating in domestic tariff area at par with EOUs.

In a bid to help exporters explore potential markets, spread product awareness and promote exports, a major initiative in the form of market development assistance is likely to find place in the new Policy.

The government has already announced tax incentives to textiles and gems and jewellery in the Budget as they were the two major exports success areas accounting for over $20 billion worth of exports annually.

The Exim policy is expected to contain more measures to boost exports of textiles which has to gear itself to face global competition with the dismantling of multifibre agreement by 2004 end.