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Foreign Trade Policy 2009-2011: Commerce Minister And Beyond
By  : Dr. H.K. Sehgal 

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The long awaited Foreign Trade Policy for 2009-14 has been announced, but perhaps even more important than the Policy itself was the speech delivered by the Minister of Commerce, Anand Sharma. Setting the tone and tenor of what was coming up was abundantly clear in his opening remarks, when he said, "this (policy) comes at a challenging time as the entire world is facing an unprecedented economic slowdown. This year we are witnessing one of the most severe global recessions in the post-war period...WTO estimates project a grim forecast that global trade this year is likely to decline by 9% in volume terms, while the IMF has projected a decline of over 11%" The speech goes on to add, "The World Bank estimate suggests that 53 million more people would fall into the poverty net this year and over a billion people would go chronically hungry."


Having given the backdrop, the Minister acknowledged "Fortunately India has not been affected to the same extent as other economies of the world, but our exports have suffered a decline in the last 10 month due to contraction in demand in the traditional export markets, with some countries resorting to protectionist measures, which are posing barrier to fee trade, which has aggravated the problem." Then he concludes, "I remain hesitant to hazard a guess on the nature and extent of this recovery and whether it is a V shape recovery or U shape recovery."


Only if we read all this in context of what he had said two days earlier than the Policy announcement, when he categorically stated, "That for labour-intensive industry exports, especially agriculture, textiles, leather, gems and jewellery, I would like to make a specific announcement or the special dispensation which would underline the sensitivity of the Government towards issues of employment."


So far, so good.


But does the Foreign Trade Policy announcement that he has made, measure upto "the sensitivity of the Government" it professes. To my point, perhaps more no than yes.


First, what are the more important highlights of Policy:


Market and Production Diversification


  1. 26 new markets have been added under Focus Market Scheme, which include 16 new markets in Latin America and 10 in Asia-Oceania.
  2. Incentives available under Focus Market Scheme (FMS) has been raised from 2.5% to 3%.
  3. Incentives available under Focus Product Scheme (FPS) has been raised from 1.25% to 2%.
  4. Market Linked Focus Product Scheme (MLFPS) has been greatly expanded by inclusion of products classified under as many as 153 ITC (HS) Codes at 4 digit level, including synthetic textile fabrics, textile made-ups, knitted and crocheted fabrics. Benefits to these products will be provided, if exports are made to 13 identified markets (Algeria, Egypt, Kenya , Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia and New Zealand).


Technological Upgradation


EPCG Scheme at Zero Duty has been introduced. This Scheme will be available for certain specified sectors including apparel and textiles (subject to exclusions of current beneficiaries under Technological Upgradation Fund Scheme (TUFS) and beneficiaries of Status Holder Incentive Scheme in that particular year. The Scheme will be in operation till 31 March 2011.


EPCG Scheme


  1. Export obligation on import of spares, moulds etc. under EPCG Scheme has been reduced to 50% of the normal specific export obligation.
  2. Taking into account the decline in exports, the facility of re-fixation of Annual Average Export Obligation for a particular financial year, in which there is decline in exports from the country, has been extended to the 5 year Policy period 2009-14.


Status Holders


To accelerate exports and encourage technological upgradation, additional Duty Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports. This facility will be available up to 31 March 2011.


 

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 Published On :  Monday, September 14, 2009

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