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SPECIALITY OF SOME ECONOMIC ZONES
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Another major initiative to boost agri and allied products exports will be the modification of norms for fixing duty entitlement passbook rates for export of agriculture, horticulture and allied products. In fixing DEPB rates for such products, we shall take into account inputs such as fertilizers, pesticides, certified seeds and so on used by the farmers prior to processing of the products for exports. This would also ensure that the Indian farmer uses the required inputs in a scientific manner to boost productivity and quality. To begin with, this facility will be extended only to selected products on the basis of the recommendation of an inter-ministerial committee.

Let me now turn to my next engine for growth, that is the special economic zone scheme. We have great hope for attracting foreign direct investment and increasing our export through this scheme. SEZs are required to provide a trouble free congenial and investment-friendly environment where units, both Indian and foreign can manufacture their products at internationally competitive prices for exports or sale to domestic tariff area. Though most of the notified green field projects have not yet got off the ground due to delay in land acquisition, the Indore SEZ is very close to coming into operation. It is important to realize that unless we convince the potential investors that location in these SEZs can give them competitive edge over similar units in other countries, we shall not be able to attract any worthwhile investment. Therefore, our endeavour will be to bless our SEZs with facilities comparable to those obtaining elsewhere in the world. To enable exporters to access funds at international rates, we are in consultation with the Reserve Bank of India and finance ministry for a suitable fiscal package for off-shore banking units set up in SEZs. All the ministries and agencies of the government of India as well as the concerned state governments will have to work unitedly with a shared vision for the success of SEZ programme. While we shall continue our efforts, including bringing in a comprehensive legislation, we will simultaneously explore the possibility of developing a scheme with features similar to the SEZ regime for export oriented units in selected sectors with capital investment in plant and machinery over Rs 25 crores.

I would like all of you to appreciate the fact that our growth in exports in the recent past has taken place in the background of somewhat of a slowdown at home. Since we are aiming to be a significant player in the world trade, we have to build up deliberately and quickly the manufacturing base in order to sustain a high rate of growth of exports. The export promotion capital goods scheme has contributed significantly to exports by facilitating expansion of the manufacturing base with limited gestation period and at a comparatively lower capital investment.

We recognize that the long term solution for the building up of a competitive manufacturing base would be to bring down the levels of import tariff on capital goods comparable to those prevailing in the countries which are considered as our competitors. Till that happens, EPCG scheme will have to be continued. At the same time, we have to make it more flexible and attractive so that even the small scale sector is able to set up and expand its manufacturing base for exports. We have, therefore, decided to take the following steps.

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