The Hindu : Exim policy focusses on exports in services sector

Online edition of India's National Newspaper
Tuesday, Apr 01, 2003

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Exim policy focusses on exports in services sector

By Sushma Ramachandran

NEW DELHI MARCH 31. In the backdrop of the ominous economic impact of the United States-led war on Iraq, the Export-Import Policy 2003-04 seeks to focus on the sunrise services sector of software, entertainment, health and tourism to boost exports and achieve the elusive target of one per cent share in world trade.

Releasing the annual policy which comes within the ambit of the long-term five-year Exim policy (2002-07), the Commerce and Industries Minister, Arun Jaitley, said the approach was "identification of engines of growth and provision of extra power to them and building on areas of our core competence". The "engines" selected in the new policy are services exports and the Special Economic Zones along with agriculture and allied products. On the precise effect of the war on exports which rose by a healthy 16.7 per cent in 2002-03, Mr. Jaitley conceded that it would depend on the length of the war and the post-war scenario especially oil prices.

A long war could have an impact on the global economy which in turn would affect Indian exports. "We are also concerned with the Gulf as a region," he said pointing to the fact it had a 11 per cent share in total exports. Highlighting the incentives for exporters in the services sector, he said that import of consumables and office equipment up to 10 per cent of the average foreign exchange earnings in the past three years would now be allowed. The facility would be available for newcomers to export against a bank guarantee and it was expected to help growth in the health sector. As for tourism, three star hotels and above would be allowed the duty-free import facility up to five per cent of foreign exchange earnings. In the entertainment sector, a dialogue was on with the Finance Ministry to give tax incentives to venture capital funds providing finance to the sector.

To give a push to agricultural exports, corporates with proven credentials would be helped to implement the Agro Export Processing Zones. Regarding the SEZs, Mr. Jaitely said that to provide them with international facilities, consultations were on with the Reserve Bank and the Finance Ministry for a suitable fiscal package for offshore banking units in the Zones.

The new Exim policy also provides a package of measures to make the export promotion capital goods (EPCG) scheme more flexible and attractive so that even the small-scale sector is able to expand into exports.

Exports of electronic hardware, another major thrust area, would be given a boost by modifying the export obligation scheme.

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