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Following is the text
of speech of Shri Kamal Nath, Union Minister of Commerce & industry, on the
announcement of Trade Facility Measures, here today:
“I am happy to be present with you this morning for
certain announcements of trade facilitation measures. Unlike the last four
years, when the global economic mood was upbeat, today we meet against the
backdrop of a global financial crisis. For the first time in more than a
generation, two of the engines of global integration—trade and capital
flows—are simultaneously expected to shift into reverse. In an interconnected globalized world, when all nations are being
impacted, India
too cannot escape unscathed. However, I believe that India
will suffer less and recover faster due to the nature of our trade, the
diversification of our trade basket, our trade facilitation measures and the
proactive steps taken by our Government. Backed by strong economic
fundamentals, the stimulus packages announced by the Government will stimulate
demand, increase confidence, uplift business sentiment and give a fresh impetus
to India’s trade and growth story.
You
may recall my first announcement in August 2004 of an integrated Foreign Trade
Policy for a 5 year period 2004-2009.
Even today our policy continues to be scripted around that singular refrain
of 2004 - “Trade is not an end in
itself, but a means to economic growth and national development. The primary purpose is not the mere earning
of foreign exchange but the stimulation of greater economic activity”. Over the last five years our initiatives have
remained focused on our twin objectives to double our percentage share of
global merchandise trade within the next five years; and to act as an effective
instrument of economic growth by giving a thrust to employment generation.
Over
the last five years, a number of initiatives were taken to meet the above
objectives as well as the strategies that had been announced in the 5 year
Foreign Trade Policy. Sectors with
significant export prospects coupled with potential for employment generation
in semi-urban and rural areas have been identified as thrust sectors and
specific sectoral strategies have been prepared. Special Focus initiatives have been prepared
for Agriculture, Handicrafts, Handloom, Gems and Jewellery and Leather and
Footwear sectors. The major initiatives
announced are in the folder before you.
Some of the major initiatives are highlighted below:
(a)
The
introduction of Vishesh Krishi Upaj and Gram Udyog Yojana for boosting exports
of fruits, vegetables, flowers, minor forest produce and their value added
products, poultry, dairy and gram udyog products.
(b)
Introduction
of a scheme for incentivising agro processing units.
(c)
Introduction
of Focus Product and Focus Market Schemes with a total incentive package
exceeding Rs. 2000 crores.
(d)
Duty
free import upto 5% for sectors like gems and jewellery, handloom, handicrafts,
leather and footwear, etc
(e)
Giving
Export Promotion Council status to Khadi & Village Industries Commission as
well as setting up of new Export Promotion Councils namely, Electronics and
Computer Software EPC, Indian Oil Seeds and Produce Exporters Association,
Services Export Promotion Council and Telecom Equipment Manufacturers
Association of India EPC.
(f)
Reduction
in customs duty under EPCG scheme from 5% to 3%.
(g)
Extension
of Export Obligation period under EPCG scheme for cottage and tiny sector from
8 years to 12 years.
(h)
Extension
of DEPB scheme till 31st December 2009.
(i)
Extension
of IT exemption for 100% EOUs till 31st March, 2010.
(j)
Introduction
of a single set of common forms called ‘Aayaat Niryaat’ Forms.
(k)
Allowing
payment of interest on delayed payments of Terminal Excise Duty and Central
Sales Tax.
The
results are there for us to see.
Indian exports which
were US $ 63 billion during the year 2003-04 have reached US$ 162 billion by
2007-08 recording an average annual growth rate
in excess of 25 per cent. This
year, i.e., during 2008-09 we did achieve a growth of 30.9% till September 2008
but there has been a set back recently due to the global recession. We hope to achieve a target of US$ 175
billion in exports this year. The
increased economic activity has resulted in generation of around 140 lakh new
jobs in the export sector. Our exports
have diversified and grown. To cite a
few examples, our exports have increased nine-fold to Brazil, seven-fold to
Pakistan, five-fold to Mauritius, four-fold to Egypt & Vietnam and
three-fold to Singapore & Turkey. Today, Indian exporters are exporting to
almost all the countries in the world including such places like Marshall
Islands, Greenland, Barbados, Costa Rica, Nicaragua, Burundi and Somalia.
In
the last 5 years, around 900 products relating to ten sectors have been granted
benefits under the Vishesh Krishi Upaj and Gram Udyog Yojana scheme and 100
products covering more than 10 sectors were granted benefits under the Focus
Product scheme. The Focus Market scheme
today covers 83 markets. The net result
is that India’s agricultural exports have increased from Rs.38,838 crore in
2003-04 to Rs.66,360 crore in 2007-08.
We
are an open economy and not only our exports are rising but our imports have
also risen. The average annual growth
rate of imports has been 34.1 per cent and the total value of imports in
2007-08 was $ 251.56 billion.
In
addition, the Government also launched a Duty Free Tariff Preference (DFTP)
scheme in 2007-08 for Least Developed Countries giving preferential market
access for 50 LDCs, 34 of which are in the African continent. This scheme covers duty free exports from
LDCs of 85% of India’s total tariff lines and another 9% would obtain
preferential access on applied rates.
We concluded a
Comprehensive Economic Cooperation Agreement (CECA) with Singapore in
2004. It is India’s first CECA with any
country covering goods, services, investment and other areas of
cooperation. We are in an advanced stage
of negotiations with ASEAN, Korea and Japan and are engaging significantly with
SAARC, EU, EFTA and Thailand. These efforts
have increased our confidence for a deeper engagement with other trading partners
and also to understand their markets for promotion of trade in both goods and
services.
Plantation
crops of tea, coffee, rubber and spices have been the key focus for this
Ministry on account of their large employment and export potential.
In
order to retain its global competitiveness in Tea in the long term, a Special
Purpose Tea Fund was constituted in January 2007 for funding replantation and
rejuvenation activities with an outlay of Rs. 4767 crores. A rehabilitation package for closed tea
gardens was also announced in 2007 & out of 33 closed gardens, 16 have
already been reopened. An e-auction for sale of tea was launched in six
centres.
As
far as coffee is concerned, interest relief was provided benefitting 13729
growers. Coffee Development Loans were
written off in respect of 14450 loan accounts.
Weather insurance cover was introduced for the first time to coffee
growers in 2007.
In
rubber, we continue to have the highest productivity in the world. During the last 5 years, new planting of
rubber was done in 35000 hectares including 25000 hectares in the North
East. In addition, replanting of rubber
was carried out in 33500 hectares. Two
new Rubber Parks, one in Tamil Nadu and one in Tripura, were also founded.
Tobacco
farmers had an unprecedented rise in terms of both exports and export
realisation. A Life Insurance scheme has been launched for Tobacco sectors and
around 65000 farmers were benefitted from this scheme.
The
Price Stabilisation Fund was created for the growers of tea, coffee, rubber and
tobacco having holdings upto 4 hectares.
A Personal Accident Insurance Scheme has also been provided for members
of this Fund.
Rejuvenation/replanting
of small and large cardamom in Kerala, Karnataka, Sikkim and West Bengal
covering 45000 hectares have been launched.
To
provide adequate insurance cover for exports, the paid up equity capital of
ECGC was increased from Rs. 400 crores to Rs. 900 crores. To underwrite credit risks beyond the
capacity of ECGC in large overseas projects undertaken by Indian exporters,
National Export Insurance Account (NEIA) scheme has been launched. This has so far covered projects worth US$
500 million.
Over
the last 5 years, 763 new 100% Export Oriented Units have commenced
operations. Exports from EOUs have
increased from Rs. 23,590 crores in 2002-03 to Rs. 1,61,281 crores in 2007-08
and provide direct employment to 323,755 persons.
The
SEZ Act 2005 and Rules 2006 came into force on 10th February
2006. This is the first time that the
SEZs have a stable policy regime. Within
three years, there have been a phenomenal success with incremental investment
of Rs.97,871 crores and incremental direct employment provided to 231,629
persons with twice that number getting employed outside. We hope to reach exports of Rs.90,000 crores
from the SEZs in 2008-09 against Rs.22,840 crores in 2005-06.
PSUs under our
control have shown excellent performance in the last five years. MMTC has increased its turnover four-fold
with gross profit increasing from Rs.129 crores in 2002-03 to Rs.429 crores in
2007-08. STC has increased its sales six
times during the same period with profits increasing from Rs.11 crores to
Rs.190 crores.
ITPO has
operationalised regional trade centers at Guwahati, Kolkatta and
Bangalore. They conceptualized and held
a bio-expo in Japan.
Indian Institute of
Foreign Trade (IIFT), a premier institution in the country for capacity
creation in international trade has been granted deemed university status.
IIFT’s branch in Kolkata has been commenced and the first batch of students
passed out last year.
During the last five
years, Anti-Dumping Directorate (ADD) has played an active role in providing
relief to Indian industry. They have initiated 137 investigations & final
findings have been issued in 111 cases.
Under the ASIDE
scheme, Rs.2514.87 crores has been spent since 2004-05 to 2008-09. Since inception, 1368 projects have been
sanctioned at a cost of Rs.22540.65 crores, leveraging Rs.17809.45 crores from
other sources. Ten percent of the ASIDE
funds are allocated for development of North Eastern areas.
Footwear Design and
Development Institute (FDDI) provides training infrastructure and technical
support to the leather industry. In
2008, a Footwear Design and Development Institute (FDDI) was established in
Fursatganj in Raibareli with an outlay of Rs.96 crores. A centre is already functioning in
Noida. Three more centers and one sub-centre
are proposed in the Eleventh Plan.
I wish to
recapitulate some important achievements in the five years of the Department of
Industrial Policy and Promotion.
The FDI policy has
been consistently rationalized & liberalized to encourage the inflow in the
country. A comprehensive review of policy in 2006, liberalization of six
sectors in 2008 and revision of norms for calculation of total foreign
investment – direct or indirect, as also for transfer of ownership and control
from resident Indian citizens to non-resident entities in 2009 are the major
steps taken in this regime. The result has been a phenomenal upswing in FDI
from $2.22 billion in 2003-04 to $24.58 billion in 2007-08, an increase of 11
times. FDI inflows in one month now roughly equal FDI inflows in the entire
year of 2003-04. UNCTAD’s World Investment Report and A.T Kearney have rated
India as the second most favoured investment destination in the world.
The Indian Patents
Act was amended in 2005 in order to make it compatible with India’s
international obligations. The Indian industry is getting conscious of the
value of Intellectual Property Rights. This is reflected in six-fold increase
in number of patents granted in last four years. In case of registration of
Geographical Indication, the number has gone up from zero in 2004 to 104
products till now. Notable are
Darjeeling tea, Pochampally ikat, Chanderi saree, Kancheepuram silk, Kollu
shawl.
The Industrial
Infrastructure Upgradation Scheme provided support in developing quality
infrastructure to industrial areas. 29 projects have been sanctioned throughout
the country with an investment of Rs. 1770 crore. Now the scheme has been
recast to incorporate the experiences of the last five years and its new avatar
will further strengthen the achievements of the current scheme.
We conceived the
ambitious Delhi Mumbai Industrial Corridor (DMIC) project alongwith the
Delhi-Mumbai dedicated freight corridor with an outlay of USD 90 billion. The
project is expected to double the employment, triple the industrial output and
quadruple the exports from the region in five years. We have already identified
early bird projects in four of the six clusters and MoU has been signed with
three states for implementation of these projects. Japanese side has also
identified five early bird projects & project formulation has been
initiated.
In our efforts to
stimulate development of backward regions/areas, an extensive package of fiscal
incentives and other concessions for industrialization of the North East region
has been notified. States of Uttarakhand and Himachal Pradesh witnessed
establishment of 4622 industrial units with an investment of over Rs. 16000
crore and employment for 2 lakh persons in last five years
Recognizing the
employment generation potential of the leather sector, the allocation for this
sector has been increased significantly. An amount of Rs. 300 crore was spent
on leather sector in last 3 years against Rs. 9 crore in the entire ninth plan.
We have approved Rs. 900 crore plan for modernization of Indian leather
industry to make it globally competitive.
The global financial
crisis seeping into the real economy has affected our exports as well, even
though merchandise and services exports constitute only 21% of our GDP. Exports from Tea, Rice, Marine Products, Gems
& Jewellery, Cotton yarn, Fabrics, Made-ups, Jute manufacturing, Carpets,
Handicrafts, Plastics & linoleum sectors have been affected extensively
this year. According to WTO, the growth
rate in global trade in goods and services is expected to decline from 7.2% in
2007 to 4.6% in 2008 and further to 2.1% in 2009. A number of measures have been taken to help
the exporters during the present economic slowdown in export markets through
three stimulus packages on the fiscal side as well as through other measures in
the banking sector. Some of the measures
include provision of interest subvention of 2% till 31.12.2009 for certain
labour intensive sectors, additional funds of Rs.1200 crores for CST/ TED /
Drawback refunds, extension of DEPB scheme upto 31.12.2009, restoration of DEPB
rates for all items at rates prevailing prior to November, 2008, and increase
in duty drawback rates on certain items effective 1st September,
2008. Around Rs.2300 crores have been
provided through various existing schemes for cushioning the adverse impact of
declining exports. In addition, certain
measures have been taken by RBI to reduce interest rates and provide
liquidity.
As you are aware, we
had fixed an export target of US$ 200 billion for the year 2008-09. However, due to the global recession, there has
been a slow down and during the period April 2008 to January 2009, total
exports are US$ 144.26 billion registering only a 13.2 per cent increase. With the slow down likely to continue in the
coming months, we expect that the target for 2008-09 would be between US$ 170
and 175 billion. I am, however,
confident that with the stimulus packages announced by my Government as well as
the stimulus packages announced by developed countries, there would be a pick
up in the demand and exports would again begin to grow. Our exporters will vigorously find space in
not only the developed markets but also in new markets and new products in
developing countries. I am therefore
quite confident of achieving a target of US$ 200 billion exports during
2009-10.
While a full year
policy for 2009-10 will be unveiled in due course by the next Government, I
announce the following steps the
Government has taken to further simplify procedures and make life of our
exporters a bit more easy:-
Ø Duty credit scrips
under Chapter 3 and under DEPB scheme shall now be issued without waiting for
realization of export proceeds.
Ø Export incentives
have been provided for certain items like Technical textiles, Stapling machine,
Handmade carpets and Dried vegetables. In addition, incentives of Rs. 325
crores would be provided for leather, textiles, etc for exports w.e.f.
1/4/2009.
Ø STCL Limited, Diamond
India Limited, MSTC Limited, Gem & Jewellery Export Promotion Council and
Star Trading Houses (only for gem and jewellery sector) have been added under
the list of nominated agencies notified under Para 4A.4 of Foreign Trade Policy
for the purpose of import of precious metals.
Ø Import restrictions
on worked corals have been removed to address the grievance of gem and
jewellery exporters.
Ø Bhilwara in Rajasthan
and Surat in Gujarat have been recognized as Towns of Export Excellence, for
textiles and diamonds respectively.
Ø At present, Govt.
recognizes Premier Trading Houses based on an export turnover of Rs.10,000
crores in the previous three years and the current year taken together. In view of the prevailing global slowdown,
the threshold limit for recognition as Premier Trading Houses is now been
reduced to Rs.7500 crores.
Ø Under EPCG scheme, in
case of decline in exports of a product(s) by more than 5%, the export
obligation for all exporters of that product(s) is to be reduced
proportionately. This provision has been
extended for the year 2009-10, for exports during 2008-09.
Ø At present, DEPB/Duty
Credit Scrip can be used for payment of duty only on items which are under free
category. The utilization is now
extended for payment of duty for import of restricted items also.
Ø The procedural
formalities for claiming duty drawback refund and for getting refund of
Terminal Excise Duty for deemed exports is further simplified.
Ø Export of blood
samples is now permitted without license after obtaining ‘no objection
certificate’ from Director General of Health Services (DGHS).
Ø Supply of an
Intermediate product by the domestic supplier directly from their factory to
the Port against Advance Intermediate Authorisation, for export by ultimate
exporter, has been allowed.
Ø Re-credit of 4% SAD,
in case of payment of duty by incentive scheme scrips such as VKGUY, FPS and
FMS, has now been allowed.
Ø I am also announcing
opening of an independent office of DGFT at Srinagar.
Ø In case of Advance
Authorisation for Annual Requirement where Standard Input-Output Norms are not
fixed, the provisions in Foreign Trade Policy have been aligned with the
relevant Custom Notifications.
Ø Value cap applicable
under DEPB have been revised for two products.
Ø Export through
Krishnapatnam seaport has been included for the purpose of Export Promotion
Scheme.
Ø Electronic Message
Transfer facility for Advance Authorisation and EPCG Scheme established for
shipments from EDI ports w.e.f. 1.4.2009.
Requirement of hard copy of Shipping Bills dispensed with thereafter for
Export Obligation discharge.
Ø Authorised person of
Gem & Jewellery units in EOU shall be allowed personal carriage of gold in
primary form up to 10 kgs in a financial year subject to RBI and customs
guidelines.
Ø For Advance Licenses
issued prior to 1.4.2002, the requirement of MODVAT/CENVAT certificate
dispensed with in case the Customs Notification itself prescribed for payment
of CVD. This will help in closure of
a number of pending advance licences.
Ø Export obligation
period against advance authorizations extended up to 36 months in view of the
present global economic slowdown.
Ø Re-imbursement of
additional duty of excise levied on fuel would also be admissible for EOUs.
Ø Clarification has
been issued by CBEC in respect of architectural services, general insurance
services, market research services, storage and warehousing services and
knowledge & technology based services so that such services used outside
India are treated as export of services. This will remove the existing
ambiguity and enable refund of service tax paid in this regard. We will continue to press Department of
Revenue for early refund of Service Tax claims and further simplification of
refund procedures.
Ø Consequential to
Press Note 2 of 2009 containing guidelines for calculation of total foreign
investment i.e. direct and indirect foreign investment by investing companies
have also been notified vide Press Note 4 of 2009.
I acknowledge the
resilience and innovativeness of the exporting community in these difficult
economic times. I would like to reassure them that they will receive the full
backing of the Government. I thank them for their cooperation and understanding.
I also thank the
media for their constructive support.
I am sure that the momentum gained
in our export efforts during the last 5 years will further enable us to utilize
trade as an effective engine for accelerating the pace of inclusive development
in this country.”
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RJ/MRS
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Speech of the Commerce & Industry Minister on the announcement of trade facilitation measures
