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March 24, 1999


Commerce ministry pats itself for good show, export-friendly policies in 1998-99

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The annual report of the commerce ministry was released in New Delhi today.

The Indian government has set up a Consultancy Trust Fund of $ 500,000 with the World Bank.

The fund will be utilised for engaging Indian consultants for the World Bank financed projects.

Exim Bank of India has been extending lines of credit to various developing countries to encourage India's project exports. These are in addition to suppliers' credit and buyers' credit.

Bonds by the Reserve Bank of India and Export Credit Guarantee Corporation have already been issued to Indian project exporters against their outstanding receivables from Iraq for their projects covered under the inter-governmental deferred payment agreements.

Market development assistance for reimbursement of 50 per cent of cost of preparation and submission of bids, and for opening overseas offices and consultancy firms, continues to be provided.

The report says that India's external trade sector was further liberalised with changes introduced in the new Exim Policy 1997-2002.

Interest rate on export credit was lowered from 12 per cent to nine per cent effective August 6, 1998. Bank guarantee has been dispensed with for certain categories of exports and reduction in transaction cost has been effected through decentralisation and simplification of procedures.

The report says that duty entitlement pass book rates for more than 2000 items had been announced. And it has been made an effective instrument of export promotion by seeking to neutralise the incidence of special customs duty of five per cent.

Licence on production programme basis has been allowed with flexibility like change in description of export products. Advance licences to export house / trading house / star trading house / superstar trading house are now being issued automatically. The licensing functions have been decentralised extensively, the annual report says.

Manufacturing units with an annual turnover of Rs 3 billion and Rs 10 billion have been made eligible for star trading house status and superstar trading house status respectively.

Hotel and tourism sectors have been made eligible for export, trading, star trading and superstar trading house status.

Benefit of the Export Promotion Capital Goods Scheme has been extended to a number of sub-sectors of the engineering sector.

During 1998-99, standard input-output norms for additional 156 items of engineering products were fixed. Import of computer drawn designs / drawings had been made freely importable.

During the year under review, the commerce ministry has constituted a special taskforce to consider the credit needs of the seafood industries. An interest subsidy scheme, to subsidise a portion of interest on the bank loans obtained for modernisation / upgradation of the marine product industry, has been introduced.

Value addition norms and wastage norms for gold / platinum / silver jewellery and articles have been rationalised.Value addition will be calculated after the deduction of the agency commission. Personal carriage of samples of jewellery upto $ 100,000 has been allowed for export promotion tours. Personal carriage by foreign buyers from export processing zones and export oriented units has also been allowed.

Legal undertaking limits for different categories of exporters have been modified. Under the loan scheme, period for fulfillment of export obligation has been increased from 90 days to 120 days, the report said.

The special package for revival of exports announced by Commerce Minister Ramakrishna Hegde in Parliament in August 1998 include enhancement of corporate tax holiday from five to ten years, sub-contracting facility in the domestic tariff area and export through courier.

There are six superstar trading houses, 37 star trading houses, 366 trading houses and 1804 export houses in the country at present.

The Directorate General of Anti-dumping and Allied Duties was created at the beginning of the current financial year. The directorate investigates allegations of dumping and subsidies and recommends suitable duties to the Central government.

The number of cases recommended for imposition of anti-dumping duties by the designated authority in the commerce ministry increased to a total of 23 products by September 30, 1998.

Recommendations have been made for imposition of provisional duties in another three cases, while 13 cases are under investigation including six review cases for imposition of duties or otherwise.

Trade policy reforms have provided an export-friendly environment conducive to accelerated export performance with simplified procedures, the report said.

After a setback during 1991-92 when exports declined by 1.5 per cent in dollar terms, revival of exports started the following year. Indian exports registered an average growth of 20 per cent during 1993-96.

However, this high growth rate could not be sustained and export growth declined to 5.3 per cent in 1996-97 and to 1.5 per cent during 1997-98. During April-December 1998, exports continued to decline by 2.88 per cent. However, they have shown an upward curve from last month.

On multilateral initiatives, the report says that having regard to existing World trade Organisation provisions on matters related to investment and competition policy, commerce ministry has constituted two expert groups on trade and investment, and trade and competition policy.

The two groups will study the issues and submit reports on the stand that should be taken by India in the WTO to defend national interests.

The report also refers to the SAARC Preferential Trading Agreement which establishes a framework for the exchange of trade concessions among the member countries of SAARC.

The final objective of the negotiations under SAPTA is the achievement of the South Asian Free Trade Area.

The tenth SAARC summit at Colombo took a concrete decision to transform this goal into a reality. Taking initiatives in this direction, India signed a free trade agreement with Sri Lanka on December 28 last.

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