Engineering exporters seek priority sector status in Foreign Trade Policy

Written by Sanjay Jog | Mumbai | Updated: Sep 11 2009, 05:29am hrs
Engineering Exports Promotion Council (EEPC) India has suggested that engineering be included as a priority sector under Chapter 1B of the Foreign Trade Policy (FTP) so that certain special focus initiatives can be provided to the sector. Further, the procedure followed with respect to Drawback benefits, where such benefits are received by exporters prior to realisation of payments, should be followed in the case of DEPB benefits as well.

EEPC India also suggested that the value addition of 15% be reversed back and the earlier stipulation of a positive value addition be kept. While all the major Latin American countries have been included in the enhanced list under Focus Market Scheme (FMS), Brazil, however, has not been included. The country needs to be included in the FMS list as the freight cost for Brazil is on par with other Latin American countries.

EEPC made these suggestions to the commerce ministry for its inclusion in the new trade policy 2009-14 already announced on August 27.

According to EEPC, it seems rather ironic that at a time when the global economy is in the dumps, the government has raised the value addition norms to 15%. Under the Advance Authorisation Scheme, the new FTP mandates a minimum 15% value addition. Earlier there was only a stipulation of positive value addition and as a result, many exporters benefited from this scheme. It may be mentioned that at the time of introduction of the Advance Licence Scheme more than three decades ago, the minimum value addition was 33%. EEPC India chairman Aman Chadha demanded that the value addition of 15% be reversed back and the earlier stipulation of a positive value addition kept.

The engineering sector is the most employment intensive segment of Indias organised industry. It accounts for 38,046 factories, which is 27% of the total 1,40,160 factories in organised industry. With respect to the total number of workers employed, engineering accounts for 1.9 million workers out of a total of 7.13 million workers in the organised industry. This implies that 27% of the total workers employed in the organised industry belong to the engineering sector. With respect to the total persons engaged (total workers plus other staff members) engineering accounts for 2.5 million out of a total work force of 9.1 million, which comes to 29% of total persons engaged. In the current fiscal 2009-10, the engineering exports have fallen on an average 20% in the first four months April-July 2009. Accordingly, EEPC India suggests that engineering be included as a priority sector under Chapter 1B of the FTP so that certain special focus initiatives can be provided to the engineering sector, Chadha said.