Thursday, April 10, 2008

Foreign trade policy on Indian exports to release

by Jo Black

The Foreign Trade Policy to be released by the Indian Commerce and Industry Minister, Mr Kamal Nath on Friday should target cost pressures on Indian exports, according to the Confederation of Indian Industry (CII).

This is necessary to give a fillip to sectors that have been hit by the sharp appreciation of the rupee, according to Mr Sanjay Budhia, Chairman CII Trade Committee. Rupee appreciation over the last year was around 11% and transaction costs too have escalated, Mr Budhia said.

At least 3% of the FOB value of the exports is avoidable transaction cost. Linking customs at ports to other agencies electronically can reduce transaction cost. This will help save time and money, Mr Budhia said.

Customs at port, export promotion councils, drug controllers, freight forwarders and other relevant agencies should be connected through EDI, which will reduce human interface and hence bring down costs, according to CII. He also hoped that the ports that were not EDI enabled till now would now be covered by EDI.

CII is of the view that the turnaround time at ports are too high in comparison to international standards and Mr Budhia said that CII looks forward to the Foreign Trade Policy addressing the issue of making procedures simpler thereby shortening the clearance time at ports. CII looks forward to emphasis on further fine-tuning of administrative and procedural measures in the annual supplement to the policy, Mr Budhia said.

Mr Budhia emphasised the need to reimburse all taxes paid by exporters to ensure that taxes are not exported. The taxes that are not reimbursed at present include educational cess, Central Sales Tax, Octroi, Service Tax, Port Charges and Electricity Tax. He hoped that these taxes would be covered under some scheme in the forthcoming policy.

Mr Budhia was of the view that the policy should also have special emphasis on the small and medium sector, which form the core of India’s exports. The SME sector is a major exporter from the country and they need more guidance and support in terms of technology infusion and market access information and brand building exercise, Mr Budhia said.

 

 

 

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