Sops extension to help neutralise meltdown impact, feels India Inc

Written by fe Bureaus | Mumbai | Updated: Aug 28 2009, 05:53am hrs
In order to give a boost to exporters, reeling under the impact of the global financial meltdown, the government on Thursday said that various schemes like DEPB (Duty Entitlement Pass Book) that provide incentives to exporters would continue. A conscious decision has been taken to continue with the DEPB scheme up to December 2010, and also income tax benefits under section 10(A) for the IT industry.

DEPB Scheme, under which duty credit is provided to exporters, has been extended for another year. This scheme was to end on December 2009. Moreover, 100% export oriented units (EOUs) and STPI units would be entitled to various tax benefits.

There is no major announcement in the pharmaceutical sector, except few period extensions. Export obligation period (EOP) for advance authorisations issued with 6-Amino Penicillanic Acid (6-APA) as input increased from existing six months to 36 months. Recently, in its letter addressed to director general of foreign trade, Pharmexcil had requested to reinstate the facility of two extensions of EOP for six months each for the exporters availing advance authorisations with input items are drugs. In foreign trade policy 2009-14, Market Linked Focus Product Scheme (MLFPS) has been expanded by including pharmaceutical products for countries in Africa and Latin America; some countries in Oceania and Far East. According to Venkat Jasti, chairman, Pharmexcil, there would not be a major impact in exports due to the announcement. There were no new announcements, but a few extensions, he said.

Anand Ladsariya, chairman, Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council (Chemexcil ), said, The Exim Policy announced by the commerce minister, maintains continuity of existing schemes like duty entitlement passbook scheme (DPEB) and Vishesh Krishi and Gram Udyog Yojna (VKGUY), focus market and focus product schemes. All the existing schemes have been continued. During this global economic crisis, the commerce minister has made efforts to help exporters by easing liquidity, providing foreign exchange loans to exporters at a lower cost and to reduce transaction cost in export, he added. Moreover, labour intensive sectors like textile, handloom & handicraft and gems & jewellery have been given special attention. Industries in North East India have been specially rewarded. Interest subvention schemes have been extended.

On the impact of new policy on the Indian branded tea industry, MC Appaiah, chief operating officer (COO) of Duncans Tea Ltd said: All these benefits will help the Indian tea industry to increase exports in 2009. There was a dip in exports last year. With these benefits, the industry should be able to recover the last volumes. According to industry analysts, the minimum value addition under advance authorisation scheme for export of tea has been reduced from the existing 100% to 50%. And DTA sale limit of instant tea by EOU units increased from 30% to 50%. Also export of tea has been covered under VKGUY Scheme benefits. This will certainly boost exports in this segment, said an analyst based in Mumbai.

Meanwhile, the new FTP disappointed the Rs 80,000-crore textile and apparel export sector as major players complain that the FTP has no financial incentives for the sector. The government should have taken a cue from neighbouring countries like Bangladesh, China and Pakistan who have announced several stimulus packages and high duty drawback rates for textile exporters.

Says a major textile exporter, We are continuously losing out to our competitors like China, Bangladesh and Pakistan who are allowed to grow by favourable policies and incentives like 3-4 years moratorium period for payment of their loans with lower rates of interest on loans.