DEPB/ECGC Cover

1. Duty Entitlement Pass Book (DEPB) has been extended beyond 31^st December 2009 till 31^st December 2010.
2. DEPB rate will also include factoring of Customs Duty component on fuel where fuel is allowed as a consumable in Standard Input-Output Norms.
3. The adjustment assistance scheme initiated in December, 2008 to provide enhanced ECGC cover at 95% to the adversely affected sectors, is continued till March 2010.

EOUs

EOUs have been allowed to sell products manufactured by them in DTA up to a limit of 90% instead of existing 75% without changing the criteria of similar goods, within the overall entitlement of 50% for DTA sale. EOUs will now be allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards. During the period of downturn, Board of Approvals (BOA) to consider extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs. EOUs will now be allowed CENVAT credit facility for the component of SAD and Education Cess on DTA sales.

Value Added Manufacturing

In order to encourage Value Added Manufactured export, a minimum 15% of value addition on imported inputs under Advance Authorization Scheme has now been prescribed.

Waivers

Waiver of Incentives Recovery, on RBI specific Write off allowed. In cases, where RBI specifically writes off the export proceeds realization, the incentives under the FTP shall now not be recovered from the exporters subject to certain conditions.

Now let the industry speak for itself on the Foreign Trade Policy:

R.K. Dalmia, Chairman, Confederation of Indian Textile Industry (CITI), said that the Foreign Trade Policy for 2009-14 is "highly disappointing for the textile and clothing industry". He said that during the run-up to the announcement of Policy, there have been several statements to the effect that the labour intensive sectors such as textile and clothing will be the focus of the policy. Even in the speech of the Minister while launching the Policy, there are references to "Sectors which have been hit hard by recession in development world" and "Special thrust to employment-oriented sectors, which have witnessed job loses in the sake of recession especially in the field of textiles, leather, handicrafts etc." However is nothing in the policy for implementing these objectives. He stated that 17 technical textile products have been included in the Focus Product Scheme. Since many of them are at 4-digit level, a substantial number of products will be covered by these and this is a welcome feature of the Policy. He, however, ass adding some countries in the Market Linked Focus Product Scheme could have provided some relief to this sector.

Rakesh Vaid, Chairman, Apparel Export Promotion Council (AEPC) felt that Foreign Trade Policy for 2009-14 has measures which are much short of those required to boost exports in the current global economic scenario. He said "Duty-free scrips, which are currently worth 2% of export values for the US and the EU, should be have be increased to 5%. Nor has the Scheme been extended beyond September. This will cripple our export performance as over 70 per cent of Indian exports are to the European Union and the US." He added that "Zero duty Export Promotion Capital Goods Scheme for textile and apparel will not benefit small and medium exporters as it excludes current beneficiaries under the Technological Upgradation Fund Scheme and beneficiaries of the Status Holder Incentive Scheme in that particular year." The addition of 26 new markets under Focus Market Scheme as announced in the Policy may yield marginal results in the short run, he said.

Speaking about the increased cash assistance available under Focus Market Scheme from 2.5% to 3% and raising of incentives available under the Focus Product Scheme from 1.25% to 2% and expansion of Market Linked Focus Product Scheme for synthetic textile fabrics, textile made-ups, knitted and crocheted fabrics, if exports are made to 13 identified markets like Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Medico, Ukraine, Vietnam, Cambodia, Australia and New Zealand, Vaid said, "These measures do not compensate for a comprehensive and competitiveness enhancement strategy in the form of a stimulus package as Indian goods are over 20 per cent costlier than those supplied by some competing countries like China, Bangladesh, Vietnam and Cambodia."