The Telegraph
Since 1st March, 1999
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What is needed is a partnership between the government machinery at all levels and all the stake holders in the process of exports. The media too has a significant role to play in bringing about a consensus on critical issues related to reforms, and promotion of investment including foreign direct investment, particularly in the manufacturing sector, without which high rate of export growth can not be sustained.

...Our approach in the new identification of engines of growth and provision of extra power to them and building on areas of our core competence. Therefore, the policy aims to provide an impetus to one important engine which has not been covered earlier. This is services exports. The other engine that will receive continued attention is special economic zones. An equally important sector namely agriculture and allied products which I believe to be an area of core competence will come in for some special treatment. This I hope, will enthuse our farming community who constitute the bulk of the country’s population. I also propose to encourage further those exporters who have been pillars of strength...and urge them to attain greater heights. Last but not least, we shall simplify procedures sharply to further reduce transaction costs.

India has already emerged as a leading player in software exports. Apart from software, a host of services now provide unprecedented opportunities in global trade. With abundant skilled manpower, India is uniquely placed to take full advantage of the growing opportunities of services exports. This is an area which can be an engine for growth referred to...earlier. We are, therefore, taking a bold initiative in not only recognizing the importance of service exports but also introducing a scheme for the promotion of exports of services. Already a strong message for the promotion and development of this sector has been given by...Jaswant Singh while presenting the budget for 2003-04. I intend to follow up with some specific steps for boosting services exports.

As regards services exports, we have to recognize the fact that with the possible exception of the software sector, we have not even made a beginning. Keeping this in mind and in order to both facilitate and promote export of services from other sectors, we propose to allow import of consumables, office and professional equipment, spares and furniture up to 10 per cent of the average foreign exchange export earning in the previous three years...We propose to extend the facility even to newcomers against bank guarantee to the extent of the revenue sacrificed. This will be subject to actual user condition. We expect that this would particularly help the health sector for which the finance minister has already given a strong signal for India to emerge as a major destination for health services.

In the services sector, only tourism has received some attention over the years although we are nowhere near realizing the full potential the country offers. In this year’s budget a strong signal has been given for the development of this sector. This sector already enjoys the benefit of the export promotion capital goods scheme. However, we have been receiving persistent representations from this industry to extend to it the benefits of advance licence scheme. We have, therefore, decided to allow recognized hotels of the category of three-star and above and other registered service providers in this sector duty free import of consumables and spares upto 5 per cent of their average foreign exchange earnings of the previous three years. This will be subject to actual user condition. The facility will not be available to certain sensitive items in a negative list to be notified for this purpose.

We have immense potential for exports in certain services sectors such as entertainment and education. Each sector has its own specific problems such as lack of investment, inadequacy of laws relating to piracy. Nonetheless, we have to leverage India’s obvious advantages in these sectors.

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