1. Commerce ministry wants priority sector status for export credit

Commerce ministry wants priority sector status for export credit

The commerce ministry will seek priority sector status for export credit and focus on a revival of special economic zones (SEZs), as it has identified six areas to prop up outbound shipments in goods, which contracted for a 15th straight month through February.

By: | New Delhi | Updated: April 7, 2016 1:17 AM
The commerce ministry will seek priority sector status for export credit and focus on a revival of special economic zones (SEZs), as it has identified six areas to prop up outbound shipments in goods, which contracted for a 15th straight month through February. The commerce ministry will seek priority sector status for export credit and focus on a revival of special economic zones (SEZs), as it has identified six areas to prop up outbound shipments in goods, which contracted for a 15th straight month through February.

The commerce ministry will seek priority sector status for export credit and focus on a revival of special economic zones (SEZs), as it has identified six areas to prop up outbound shipments in goods, which contracted for a 15th straight month through February.

Following the first meeting of a reconstituted board of trade, chaired by commerce and industry minister Nirmala Sitharaman, the ministry has also decided to lay even greater stress on promoting exports by small and medium enterprises, involving missions and embassies to boost trade. It will also sort out issues of EXIM Bank and Export Credit Guarantee Corporation (ECGC) for the smooth availability of credit, apart from promoting exports of organic products.

Sitharaman said her ministry will take up with the finance ministry the issue of according priority sector status to export credit to help exports, in sync with the suggestion by ICICI Bank managing director Chanda Kochhar. “We are going to hand-hold sectors that need help,” she said.

She said the ministry would work on improving the potential of SEZs and taking advantage of the huge land bank available with them. “We will meet with different line ministries. We will call up an SEZ-specific focus meeting with departments, including economic affairs and the Central Board of Excise and Customs, and industry experts,” Sitharaman said.

The commerce ministry would also take up the issue of more financial flexibilities to Exim Bank with the Reserve Bank of India (RBI) and the finance ministry. Senior industry executives raised issues including minimum alternate tax (MAT) and dividend distribution tax (DDT) on SEZs, and problems in getting credit for SMEs.

Industry leaders who attended the meeting include ICICI’s Kochhar, TVS Motor Company chairman Venu Srinivasan, Biocon managing director Kiran Majumdar-Shaw and Dr Reddy’s MD Satish Reddy.

‘Notion of revenue forgone due to benefits to SEZs a myth’

Pressing for the removal of minimum alternate tax and dividend distribution tax on SEZs, the commerce ministry on Wednesday said the notion of revenue forgone due to SEZs is a “myth”. Making a presentation at the board of trade meeting, joint secretary in the commerce ministry Guruprasad Mohapatra said while SEZs got income tax benefits of R358 crore and indirect tax benefits worth R8,424 crore in 2014-15, exports from such zones touched R4.63 lakh crore. It is a worldwide-accepted practice that exports shouldn’t be taxed. “Even domestic tariff area units enjoy tax benefits in the course of exports, hence the duty foregone is a myth,” he said.

The government imposed an 18.5% MAT on SEZ developers and units and DDT on developers in 2011-12 when Pranab Mukherjee was the finance minister, after the revenue department had complained of massive losses to the exchequer due to such exemptions.

Ministry push
* The commerce ministry will seek priority sector status for export credit and focus on a revival of special economic zones (SEZs), as it has identified six areas to prop up outbound shipments in goods, which contracted for a 15th straight month through February
* Following the first meeting of a reconstituted board of trade, chaired by commerce and industry minister Nirmala Sitharaman, the ministry has also decided to lay even greater stress on promoting exports by small and medium enterprises, involving missions and embassies to boost trade

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