In a watershed Exim Policy, the government announced a major package for exports of services, special focus on high growth sectors like textiles, auto, gems and jewellery and dismantled restrictions on export of five items like paddy, rare earth and cotton linters.
Unveiling the policy, Commerce Minister Arun Jaitely simplified procedures, made the popular Export Promotion Credit Guarantee scheme more flexible and attractive, and gave new thrust to agriculture exports.
This would be for the first time there would be simultaneous notifications of announcements by the Director General of Foreign Trade and the Central Board of Excise and Customs to remove harassment to exporters.
Besides giving special focus on potential high growth sectors like drugs and pharmaceuticals, electronics hardware, Jaitley announced development of ten new export clusters and steps to facilitate corporate investment to boost agro-products.
The new look Exim Policy aimed at building on areas of India's core competence gives major boost to health care, entertainment, professional services and tourism in a bid to give massive thrust to export of services.
Aiming to achieve $80 billion annual exports by 2002 from the present level of $50 billion, the policy seeks to reduce transaction costs, introduce annual advance licence for status holders and diversify export markets by focussing on CIS (Commonwealth of Independent States) countries from April 1, and enlarging growing African market by covering 24 countries.
On services exports, Jaitely said apart from software, a host of other services provided unprecedented opportunities in global trade and with abundant skilled manpower India was ‘uniquely' placed to take full advantage of growing opportunities of services exports, which was the engine of economic growth.
"We are, therefore, taking a bold initiative in not only recognising the importance of service exports, but also introducing a scheme for forex promotion," he said.
"We have not even made beginning in the promotion of services sector, excepting software," Jaitley admitted.
"The policy announced on Monday would particularly help sectors like health, for which Finance Minister Jaswant Singh has given strong signal to India to emerge as major destination for health services," he said.
Announcing a package for entertainment industry, Jaitley said this sector, which was 'singularly handicapped' by lack of investment, would now be promoted by encouraging venture capital funds into the sector.
Suitable tax incentives would be given to the venture capitalists, in consultation with the finance ministry, he said, adding that a sector-specific working group would be set up for this purpose.
Terming agriculture exports as an area of India's core competence, he said that the fixation of Duty Entitlement Passbook Scheme (DEPB) rates for selected agro products would take into account the cost of inputs like fertilisers, seeds and pesticides, and this would help increase productivity thereby benefiting farmers.
Apart from removing quantitative restrictions on five items, including paddy (except basmati), cotton linters, rare earths and silk cocoons, Jaitley said agriculture export zones would be encouraged across the country with as many as 45 already been notified.
Referring to the small-scale sector, Jaitley announced a series of steps to make the EPCG scheme more flexible and attractive so that the SSIs could be set up and their manufacturing base expanded.
These include import of capital goods for pre- and post- production facilities, rationalisation of export obligations, allowing import of spares and doing away with existing conditions of imposing additional export obligation of 50 per cent for products in the higher value chain.
Besides, the new policy provides for fulfilment of export obligations and allows import of capital goods up to ten years old under the EPCG scheme and counts royalty payments from abroad for discharge of export obligations under the scheme.
Outlining the package of incentives for fast growing 'status holders,' Jaitley said a duty-free entitlement would be given to them for import of capital goods, spares, office equipment and consummables.
"This would be available to the status holders achieving a growth rate of 25 per cent or more in the current year with a minimum export performance of Rs 25 crore (Rs 250 million)," he said.
The Exim Policy 2003-04