Exporters reeling under the dollar slide could be in line for a slew of reliefs in the Foreign Trade Policy coming up next month.
The steps being contemplated by the Commerce Ministry range from possible reimbursement of, or rebate on, some of the taxes incurred on export production; to zero duty EPCG (export promotion capital goods) scheme in place of the five per cent concessional duty, possibly for the first time.
These and a dozen other sops are being considered to mitigate exporters’ losses due to the rupee’s 11 per cent appreciation against the dollar, according to a note circulated by the Commerce Minister, Mr Kamal Nath, at a meeting organised by the Federation of Indian Exporters’ Organisation here on Friday.
Export growth
He said he still expected an export growth of 20 per cent this fiscal over 2006-07. The target is $160 billion. “The abatement of service tax on all services related to export production and delivery of exports” is being examined. The Government is also debating a scheme to reimburse or discount even State levies such as octroi, mandi tax, electricity duty that are currently not reimbursed.
Those exporting more than 75 per cent of their production may also get the EPCG benefit without any binding on average EO (export obligation).
Textiles and automobiles may also get the benefit of duty-free import of R&D equipment up to 25 per cent of f.o.b. value.
Mr Nath said, “The worldwide slowdown driven by the US (dollar slide) is a problem but there are other engines of growth” such as Europe, Africa and China. “We are looking at country-specific duties and we are going to have trade agreements.”
With Japan, for instance, there had been a breakthrough in the MFN (most favoured nation) negotiations. Europe and top African countries were the other preferred baskets that were being pursued.
SHORT OF TARGET
Total exports are likely to touch $ 150 billion by the end of March, falling a little short of the targeted $160 billion, according to Mr Sakthivel, Vice-President & FIEO Regional Chairman. He said exports from labour-intensive and employment-intensive sectors like textiles, readymade garments, handicrafts, leather products had declined.
Calling for a dual rate system for exporters, he said, “With the support of the Government, we are sure that exports will accelerate in the last quarter.” He urged the Minister to take up the issue of RTAs (regional trade pacts) that were eating into Indian export markets.
The FKCCI President, Mr S.S.Patil, said infrastructure such as electronic data interchange would cut export cost and bring the $ 200-billion export target for 2008-09 closer.
Saturday, April 12, 2008
Inflation surges to 40-month high
RISING INFLATION :
With no let-up in prices of vegetables, milk, edible oils, fuels and iron and steel, inflation spiked sharply to its highest levels since November 2004, even as fresh industrial production data reflected signs of a pick-up in output.
The easing of concerns about the extent of a slowdown in the broader economy, amid the sustained upward spiral in price levels, increases the odds that the RBI might opt to tighten monetary policy when it holds a review at the end of the month, analysts point out.
The annual Wholesale Price Index-based inflation rose 7.41 per cent during the week up to March 29, up sharply from the previous week’s 7 per cent rise. During the latest week, wholesale prices in the iron and steel category were up a whopping 34 per cent on a year-on-year basis, while edible oil prices shot up 20 per cent.
Among essential items, cereal prices jumped 7 per cent, vegetables were up 16 per cent, while prices of both milk and spices spurted 8 per cent in the wholesale markets. Dairy products were up 9 per cent, while cement prices jumped 5 per cent. In the fuels category, both mineral oil and coal prices were up 9 per cent.
Meanwhile, industrial production grew 8.6 per cent this February from a year earlier, higher than January’s upwardly revised 5.8 per cent rise, according to IIP data released on Friday. This, however, was lower than the 11 per cent recorded during the same month a year ago.
During the month, manufacturing clocked an 8.6-per cent growth, electricity generation was up 9.8 per cent while mining output was up 7.5 per cent.
The strongest growth was in consumer non-durables, including items such as toothpaste and soaps, which rose 11 per cent from February a year ago, while momentum in the capital goods segment picked up, with a 10.4 per cent rise in output after January’s dismal 2.1 per cent (pre-revised). Consumer durables recorded a 3.3 per cent growth.
Ban on exports
Adding to the series of measures already in place to curb rising prices, the Government on Friday announced a ban on cement exports, besides withdrawing export incentives for rice and primary steel items in its new Foreign Trade Policy. The Government has already banned export of non-basmati rice, edible oils and pulses in an attempt to curb inflation.
The Cabinet Committee on Prices is now slated to consider a fresh set of proposals next week, including a ban on steel exports.
The Cabinet panel is also likely to consider proposals like a cut in excise duty on finished steel and scrapping customs duty on imported steel.
‘Global phenomenon’
Responding to the latest inflation numbers, the Centre termed soaring prices as a global phenomenon and said it was taking all possible steps to contain the rise. “The Government has no magic wand to bring down inflation. Due to a rise in prices worldwide, it has become an imported inflation,” the Minister for Science and Technology, Mr Kapil Sibal, said while briefing the mediapersons after a Cabinet meeting here.
With no let-up in prices of vegetables, milk, edible oils, fuels and iron and steel, inflation spiked sharply to its highest levels since November 2004, even as fresh industrial production data reflected signs of a pick-up in output.
The easing of concerns about the extent of a slowdown in the broader economy, amid the sustained upward spiral in price levels, increases the odds that the RBI might opt to tighten monetary policy when it holds a review at the end of the month, analysts point out.
The annual Wholesale Price Index-based inflation rose 7.41 per cent during the week up to March 29, up sharply from the previous week’s 7 per cent rise. During the latest week, wholesale prices in the iron and steel category were up a whopping 34 per cent on a year-on-year basis, while edible oil prices shot up 20 per cent.
Among essential items, cereal prices jumped 7 per cent, vegetables were up 16 per cent, while prices of both milk and spices spurted 8 per cent in the wholesale markets. Dairy products were up 9 per cent, while cement prices jumped 5 per cent. In the fuels category, both mineral oil and coal prices were up 9 per cent.
Meanwhile, industrial production grew 8.6 per cent this February from a year earlier, higher than January’s upwardly revised 5.8 per cent rise, according to IIP data released on Friday. This, however, was lower than the 11 per cent recorded during the same month a year ago.
During the month, manufacturing clocked an 8.6-per cent growth, electricity generation was up 9.8 per cent while mining output was up 7.5 per cent.
The strongest growth was in consumer non-durables, including items such as toothpaste and soaps, which rose 11 per cent from February a year ago, while momentum in the capital goods segment picked up, with a 10.4 per cent rise in output after January’s dismal 2.1 per cent (pre-revised). Consumer durables recorded a 3.3 per cent growth.
Ban on exports
Adding to the series of measures already in place to curb rising prices, the Government on Friday announced a ban on cement exports, besides withdrawing export incentives for rice and primary steel items in its new Foreign Trade Policy. The Government has already banned export of non-basmati rice, edible oils and pulses in an attempt to curb inflation.
The Cabinet Committee on Prices is now slated to consider a fresh set of proposals next week, including a ban on steel exports.
The Cabinet panel is also likely to consider proposals like a cut in excise duty on finished steel and scrapping customs duty on imported steel.
‘Global phenomenon’
Responding to the latest inflation numbers, the Centre termed soaring prices as a global phenomenon and said it was taking all possible steps to contain the rise. “The Government has no magic wand to bring down inflation. Due to a rise in prices worldwide, it has become an imported inflation,” the Minister for Science and Technology, Mr Kapil Sibal, said while briefing the mediapersons after a Cabinet meeting here.
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