New Delhi, April 19: The Union government today abolished service tax on all exports, extended duty sops to special economic zones and included more farm items for incentives while setting a target of $160 billion for merchandise exports during 2007-08.
Unveiling the annual supplement to Foreign Trade Policy 2004-09, commerce and industry minister Kamal Nath said the export target of $125 billion for 2006-07 had been met. While the target for the current financial year has been set at $160 billion, it is $200 billion for the next fiscal.
Nath said, “We have factored in the appreciation of rupee and requested the Reserve Bank of India to provide concessional loans to exporters to achieve the ambitious export target.”
The minister will be meeting leading export promotion organisations next week to devise a strategy to deal with rupee appreciation.
Though the slowdown in the US economy has been taken into account, Nath felt it will not have a major impact on exports as the country’s trade basket is quite wide.
Nath said there would be duty credit of 10 per cent on incremental export growth of select high-tech products. The list of such products will be notified after consulting the ministries concerned.
The duty entitlement passbook scheme (DEPB) has been extended till March 2008. The new scheme to replace the DEPB will be ready by then.
The tax incentive scheme for agriculture will now be for more items.
Tax reliefs under Vishesh Krishi and Gram Udyog Yojana will be available to exporters of coconut oil, soyabean oil, soups, pasta, sauces and bakery products.
There will be more duty benefits on equipment for cold storages and refrigerated vans — a move benefiting companies such as Reliance and Bharti, which are expanding in the fast-growing retail sector.
The trade policy also extended the entitlement of duty exemption and remission schemes to developers and co-developers of special economic zones (SEZs).
Credit has been allowed under the DEPB scheme on customs duty and special additional duty on fuel. This will benefit units running on generators.
The government has also allowed duty free import of machinery and equipment for effluent treatment plants in the handloom sector.
The trade policy has relaxed the norms for the export promotion capital goods scheme (EPCG). Exporters in the tiny and cottage industry will get 12 years instead of eight to fulfil their export obligations.
Spares will be allowed under the EPCG scheme for plants that have not been imported under the scheme.
A system to pay interest for delay in refunds has also been introduced.