EPCES DELEGATION MEETS FM, ANAND SHARMA ON DTC

Thesynergyonline Export Bureau

NEW DELHI, JULY 21 :
EXPORT Promotion Council for EOUs and SEZs (EPCES) delegation, which comprised Mr R K Sonthalia, Chairman, EPCES, Dr L.B Singhal, Director General, EPCES and SEZ developers met Mr Pranab Mukherjee, the Union Finance Minister and Mr Anand Sharma, Union Minister for Commerce & Industry today on the issue of Direct Tax Code.

Mr Mukherjee assured the delegation that suggestions made by the delegation would be looked into carefully. At this meeting Mr S S N Moorthy, Chairman, CBDT and other senior officers from Department of Revenue were also present at the meeting. Mr Anand Sharma, Commerce & Industry Minister also assured that the issue relating to impact of Direct Tax Code on SEZs would be discussed with the Finance Minister.

Mr R.K. Sonthalia, Chairman, EPCES informed that New Revised Discussion Paper on Direct Tax Code virtually amounts to closing down of the SEZ Scheme as this discussion paper provides income tax exemption to only existing SEZ units. In case no income tax benefit is provided to the new SEZ units, no entrepreneur would like to set up a unit in the SEZ as indirect tax benefits are available outside SEZ as well and the benefit of certain schemes like Focus Product Scheme, Focus Market Scheme, VKGUY Scheme are available to the exporters outside which are not available to the units in the SEZ.

Since no new SEZ unit will come up in the SEZs, the development of all the SEZs will stop as no developer would like to develop SEZ in case an investor is not going to come up for setting up a SEZ unit. The massive investment by international and domestic investors has already been committed under the SEZ Scheme, based on the sovereign promise made by an Act of Parliament (SEZ Act). The Revised Discussion Paper on DTC has come as a rude shock to all investors in the SEZ Scheme, he added.

Mr Sonthalia further informed that many countries in the world, including our neighbouring countries, are already providing exemption from income tax to the investors under the SEZ Scheme. These countries include Bangladesh, Sri Lanka, Pakistan, Vietnam, Thailand, Malaysia, Indonesia, Philippines etc. Many of these countries are also having bilateral and multi lateral agreements with other countries.

Hence international and domestic investors would make investment in the SEZs in these countries which will lead to drawing away investment, exports and employment from India to other countries.

Mr R.K. Sonthalia, Chairman, EPCES strongly requested that SEZ Act is a standalone Act of the Parliament and it is for the first time that even income tax related provisions relating to the SEZ Scheme has been made part of the SEZ Act as second schedule of the Income Tax Act. Hence, SEZ Act should not be altered by any legislation including Direct Tax Code.

Dr L.B Singhal, Director General, EPCES stated that SEZ Act was enacted in June 2005 and made operational from February 10 , 2006 to ensure long- term continuity and stability to the Scheme. India was the first country in Asia to start Export Processing Zone Scheme when the first EPZ was set up in Kandla in 1965. EPZ Scheme was reviewed and SEZ Scheme was incorporated in the Foreign Trade Policy in the year 2000.

Dr.Singhal further informed that in 40 years from 1965 to 2005, investments in the SEZs reached only upto Rs.2,793 crore. Similarly, exports from SEZs reached to Rs.22,000 crore in 2005-06. We reached the level of employment to the extent of 1,34,704 persons in 2005-06. However, after enactment of SEZ Act, in 4 years, investments have increased from Rs.2,793 crore to Rs.1,48,489 crore , exports have increased from Rs.22,840 crore to Rs.2,20,711 and employment from 1,34,704 persons to 5,03,611 persons.

This was because by enacting SEZ Act, India give a very strong message about longterm stability and continuity of the Scheme. In case SEZ is going to be guided by Direct Tax Code, which could be altered every year by budgetary exercise, then we will be striking at fundamental strength of the SEZ Scheme. Hence, SEZ Scheme must not be altered by any legislation, he added.

Dr.L.B. Singhal, Director General, EPCES informed that Developers like Ansal Properties, DLF , Ascendas Services India, Gurgaon, Reliance Industries, New Delhi, Reliance Haryana SEZ, Gurgaon, Brandix Apparel India , Visakhaptnam, Mahindra World City SEZ, Jaipur, Mahindra World City SEZ, Chennai, Unitech, New Delhi, Sri City (P) , Hyderabad, have come from different parts of India to join the delegation for meetings with Finance Minister and Minister for Commerce & Industry.

Thesynergyonline Export Bureau

NEW DELHI, JULY 19 :
EXPORTS from SEZs, as on June 30, 2010 stood at 58,756.68 crore which is 67 per cent higher than the exports from SEZs in the corresponding period of the previous financial year. Exports from SEZ in the first quarter of last financial year were Rs. 35,013 crore. The growth in export is on top of very high growth in exports registered from SEZs last year.

Exports from SEZs in the 2008-09 were about 99,000 crore which increased to 2,20,000 crore in the year 2009-10, showing a growth of 120 percent last financial year.

The growth in export of 40 percent from SEZ is on top of growth of 120 percent registered last year. Exports from SEZs have gone up from 22,000 crore in the year 2005-06 (SEZ Act and Rules were made operational from February 10, 2006) to 2,20,000 crore in the year 2009-10, showing a growth of 10 times in 4 years.
 
The total direct employment in the SEZ as on June 30 , 2010 is 5,50,323 person as against 5,03,611 person as on March 31 , 2010 and accordingly additional direct employment for 46,712 person have been created in the first quarter of current financial year.

The total investment in the SEZs till JUne 30, 2010 is 1,66,526 crore as against investment of 1,48,488 crore as on March 31, 2010. An additional investment of. 18,000 crore has been made in the SEZs in the first quarter of the current financial year. (editor@thesynergyonline.com)

'RESTORE TAX BENEFITS FOR SEZs IN NEW DTC TOO'

Thesynergyonline Export Bureau

NEW DELHI, JULY 09 :
THE Associated Chambers of Commerce and Industry of India (ASSOCHAM) has demanded continuation of existing tax benefits, incentives and holidays scheme currently available to Special Economic Zones (SEZs) under the new Direct Tax Code (DTC) regime also.

The Chamber in a note to the government has underlined the need for the tax benefits in the new Direct Tax Code (DTC) regime due to the apprehension that these may be discontinued.

In a representation sent to the Finance Minister, Mr. Pranab Mukherjee by the Chamber , it is argued that the draft tax code which will lead to overhaul of the Income-Tax Act has created uncertainty for both present and potential investors, who do not know whether their investments would get the returns that they have calculated based on the existing tax laws.

This is because the code does not mention anything about units inside SEZs, but has a separate chapter on proposed guidelines that specify how developers of the tax free industrial enclaves will be treated in the new tax regime.

If the provisions for the code get translated into the new Income-Tax Act, it is clear that SEZ units set up after the new law is implemented will not enjoy any direct exemption. Such provisions will be a major roadblock in the development and growth of SEZs in India, pointed out the Chamber.
"Schemes like SEZs are special schemes with defined objectives of enhancing India's share in global trade, attracting foreign and domestic investment, creating world class business and social infrastructure, generating employment and alst but not the least, providing a hassle free business environment to entrepreneurs", holds ASSOCHAM.

According to it, the phenomenal performance of the SEZs during last three years is an evidence to support that given the laissez faire regime, the business will deliver and it is therefore requested that tax incentives should continue for SEZs and their developers after the new DTC is rolled out for execution.
Some of the tax incentives which should go on for SEZs and their developers and promoters include 100 per cent income-tax reduction under Section 80-IAB for any consecutive 10 years out of first 15 years from the date of notification of SEZ.

The government is likely to make a tinkering in this against the desire of those that have plans for SEZs.
Secondly, SEZ units should continue to get Income-tax exemption under Section 10AA of the Act for a complete tax holiday to SEZ units for a period of 5 years. This should be applicable from the year in which the unit begins it's manufacture or production.

Thirdly, 2 per cent Minimum Alternate Tax (MAT) being proposed by the government on SEZs in the new DTC is uncalled for and is against the spirit and interest of SEZ Act. This is expected to discourage capital formation in the SEZ and in the economy as a whole.

The ASSOCHAM has reiterated that levy of MAT would be against the very spirit of SEZ scheme which seeks to exempt the export income of the units. Since, SEZ units are not eligible to income-tax on export profits, there is no question of levying MAT. (editor@thesynergyonline.com)

SEZ ACT SHOULD NOT BE ALTERED IN ANY WAY

Thesynergyonline Export Bureau

Export Promotion Council for EOUs and SEZs delegation meeting Mr Anand Sharma, Union Minister for Commerce and Industry in New Delhi ..

NEW DELHI, JULY 02 :
EXPORT Promotion Council for EOUs and SEZs (EPCES) delegation, which comprised, Mr R K Sonthalia, Chairman, EPCES, Dr. L. B. Singhal, Director General, EPCES and prominent SEZ developers recently met Mr Anand Sharma, Union Minister for Commerce & Industry.

Mr R.K. Sonthalia, Chairman, EPCES requested that SEZ Act was enacted just 4 years back and based on the promise made by the SEZ Act and Parliament, huge investments have been made and committed by international and domestic investors. He stated that at present Revised Discussion Paper on Direct Tax Code provides benefits only to the existing SEZ Units.

In case the benefits are not given to the new units, no entrepreneur would make investments in the SEZs and even SEZ Developers would stop their activities completely. It would virtually amount to closing down of the Scheme.

He strongly requested that SEZ Act is a standalone Act of the Parliament and it is for the first time that even income tax related provisions relating to the SEZ Scheme has been made part of the SEZ Act as second schedule of the Income Tax Act. Hence, SEZ Act should not be altered by any legislation including Direct Tax Code.

Dr.L.B. Singhal, Director General, EPCES stated that India started Export Processing Zone (EPZ) in 1965 and between 1965 to 2000, 8 EPZs were set up in the country. Then the SEZ Scheme was introduced in the year 2000. From 2000 to 2005, SEZ Scheme was operated as a part of the Foreign Trade Policy.

In 40 years from 1965 to 2005, investments in the SEZs reached only upto Rs.2,793 crore. Similarly, exports from SEZs reached to Rs.22,000 crore in 2005-06. We reached the level of employment to the extent of 1,34,704 persons in 2005-06. However, after enactment of SEZ Act, in 4 years, investments have increased from Rs.2,793 crore to Rs.1,48,489 crore , exports have increased from Rs.22,840 crore to Rs.2,20,711 and employment from 1,34,704 persons to 5,03,611 persons . he stated .

This was because by enacting SEZ Act, India give a very strong message about longterm stability and continuity of the Scheme. In case SEZ is going to be guided by Direct Tax Code, which could be altered every year by budgetary exercise, then we will be striking at fundamental strength of the SEZ Scheme. Hence, SEZ Scheme must not be altered by any legislation, he said.

Mr Anand Sharma, Union Minister for Commerce & Industry stated that he is fully aware about the Direct Tax Code and its implication on the SEZ Scheme. He assured EPCES Delegation that he would discuss this matter with Shri Pranab Mukherjee, Hon'ble Finance Minister so that investments, exports and employment in the SEZ Scheme could be accelerated further.

Export Promotion Council for EOUs and SEZs (EPCES) had also organized a meeting with Dr.Rahul Khullar, Secretary (Commerce) on June 25, 2010 at Kolkata wherein all the prominent SEZ Developers had participated and had apprised Dr.Rahul Khullar about the consequences of the Direct Tax Code on the SEZ Scheme.

EPCES had also organized an interactive meeting of prominent Developers with Shri D.K. Mittal, Additional Secretary (Commerce) on June 30, in New Delhi on this issue. Mr R.K. Sonthalia, Chairman, EPCES, Dr.L.B. Singhal, Director General, EPCES and other prominent Developers had also met Mr Sunil Mitra, Secretary (Revenue) on June 14, 2010. They have also met Mrs.Omita Paul, Adviser to Finance Minister on July 1 , 2010.

EPCES has also sent a detailed representation on this subject to Dr.Manmohan Singh, Prime Minister of India, Mr Pranab Mukherjee, Finance Minister, Mr Anand Sharma, Commerce & Industry Minister, Dr.Montek Singh Ahluwalia, Dy.Chairman, Planning Commission, Mr T.K.A. Nair, Principal Secretary to Prime Minister of India, Mr K.M. Chandrasekhar, Cabinet Secretary, Dr.Rahul Khullar, Commerce Secretary, Mr Sunil Mitra, Secretary (Revenue). EPCES also intends to meet Finance Minister on this subject. (editor@thesynergyonline.com)

FOOD PROCESSING REQUIRES US$ 30 BILLION INVESTMENT

Thesynergyonline Economic Bureau

NEW DELHI, JULY 02 :
INDIA will need approximately over US$30 billion worth of investment to completely re-structure its processing-food industry to substantially lift up the share of processed food trade, which currently stands at 2.2 per cent in case of fruit and vegetables, 26 per cent fisheries, 6 per cent poultry, 20 per cent buffalo meat and 35 per cent milk by 2015, according to a study on 'Emerging Opportunities and Strategic Thrust Areas for Food Processing'.

The study brought out by The Associated Chambers of Commerce and Industry (ASSOCHAM), also suggests that with projected investment, export of processed foods could increase by over 70 per cent in next 5 years to touch the targeted level of over $25 billion from the current level of approximately $15 billion. However, in spite of vast natural resources, import growth of food products in India is also expected to be strong over the forecast period to reach $13 billion.

The ASSOCHAM, has projected that US$ 30 billion worth of investment can revolutionize Indian food processing sector and take up processing of food and vegetables to levels close to 10 per cent by 2015. In case of fisheries, it has possibilities to reach 40 per cent levels, close to 15 per cent about poultry and over 40 per cent in case of buffalo meat and nearly 60 per cent as regards to milk. Processing levels of fruit and vegetables in case of the US, Philippines and China currently exists at 65 per cent, 78 per cent and 23 per cent respectively.

Fisheries and poultry processing levels in developed world range between 60-70 per cent as against between 60-75 per cent as regards to milk, points out the ASSOCHAM paper.

Releasing findings of ASSOCHAM paper, its president, Dr. Swati Piramal said that India's low level of processing is expected to change significantly in future fuelled by sustained economic growth and steady urbanization. The projected investments will create a sufficient infrastructure to bring processing food into organized sector, vast segment of which is currently in the unorganized sector, said Dr. Piramal.

The key growth driver of food processing sector in India, according to ASSOCHAM paper will include faster pace of urbanization, rise in disposable incomes and changing lifestyle and aspirations which will lead to significant changes in food habits of Indians.

The key trends for growth of processed food will consist of: Increasing spends on health and nutritional foods, increasing nuclear families and working women and functional foods.

Consumers are more focused on health. Any packaged food that has sugar, salt, oil, preservatives etc. beyond a healthy level are becoming a no-no. Companies already are targeting this segment with numerous product launches. Secondly, increasing nuclear families, students and single employees staying alone on work/education and increasing women employees are leading to rise in consumption of processed ready-to-eat canned and frozen foods.

The number of upper and middle class Indians consuming packaged food is expected to rise to 200 million in 2012 from the current 30 million. Giants like ITC, MTR, Amul etc. are quick to capitalize on this trend. Thirdly, changing lifestyle and increasing spend for snack-on-the-go is responsible for a $3 billion and growing snack market.

Functional foods, fresh or processed foods that claim to provide health benefits apart from serving the basic function of nutrition, are on the fast-growth path in India. Organized retail comprises of less than 5 per cent of the total retail market in India, but is growing at over 20 per cent. Food retailing, which constitutes 14 per cent of the organized retailing, is also expected to benefit from the growth of organized retail and the demand for processed foods is expected to rise. With increasing trend of major retailers towards private labels, the demand from retail market for processed foods is also expected to increase significantly.

The change in demographics is the most important demand booster for the processed food in India. The proportion of the productive age group (15-59 years) is nearly 80 per cent in India. This age group's propensity and ability to spend on quality processed food is higher. Higher incomes as more Indians join to middle class and upper class also impact the demand of processed food positively. (editor@thesynergyonline.com)

PROCESS PLANT MANUFACTURERS UP IN ARMS AGAINST ANTI DUMPING PROBE

Thesynergyonline Export Bureau

MUMBAI, JUNE 07 :
THE process plant manufacturing industry and exporters of stainless steel products from India are up against anti dumping investigation initiated by the ministry of commerce against imports of stainless steel hot rolled sheets and coils originating from European Union, South Korea, Taiwan, the USA and South Africa.

“We are shocked that the Commerce Ministry has once again started anti dumping investigations based on misleading facts submitted by a large domestic manufacturer namely Jindal Stainless Limited (JSL) without discussing the matter with the critical segment of end user’s of high grade stainless steel including oil and gas ,desalination, heavy equipment manufacturers, nuclear power, automotive, stainless steel pipe ,infrastructure and petrochemical industry” said Mr Ramachandran, Secretary, Process plant Machinery Association of India (PPMAI)

“The initiation of anti dumping investigation has already adversely affected the business plans of hundreds of downstream process plant manufacturers as they produce equipment for emerging critical segments of the nation as well as meet the competitive global demand through exports.

Most of out members have to use sheets and coils in the widths as high as Two meters and plates in the widths as high as three meters,"Mr Ramachandran said.

“Unfortunately these specific required dimensions in all grades of stainless steel required for design, safety, quality and specific required dimensions is not available in the domestic market nor manufactured by the complainant JSL, the manufacturer and end users have been sourcing the stainless steel hot rolled products from global manufacturers including Outokumpu, ArcelorMittal and Acerinox since many years, ” he added

"The scope products put under investigation by the Ministry of Commerce are presently not manufactured by sole petitioner Jindal Stainless Ltd as it has manufacturing capacity up to width of 1250mm and cannot offer widths beyond 1250mm in HR under any conditions.

It is technically impossible for them to manufacture higher widths and the same has been notified by the Ministry of Commerce in the stainless steel CR case notification released in November 2009.

The products which are beyond 1250mm in width should be immediately withdrawn from the list of the investigations as these products are not being manufactured in India and do not affect the domestic manufacturer . (editor@thesynergyonline.com)

EURO ZONE CRISIS TO HAVE 'MINIMAL EFFECT ' ON EXPORTS: FINANCE SECRETARY

Thesynergyonline Economic Bureau

NEW DELHI, MAY 10 :
EURO Zone Sovereign Debt crisis would have 'minimal effect” on India’s exports in current fiscal as it has maintained a good track record of overcoming bigger crisis of much larger scale and volume in recent past thus there is no need to be apprehensive on this front as situation would shortly improve, says Finance Secretary, Mr. Ashok Chawla.

Inaugurating ASSOCHAM organized conference on Banking and Financial Regulators here on Monday, Finance Secretary, however, admitted that India’s exports in short term to European Union and it’s market could face some problem due to it’s ongoing financial crisis.

In the long run, however, the impact would be negligible as India has faced bigger crisis of larger volumes without letting it’s economy shrink beyond a point and the current crisis of Europe are going to be a temporary affair.

Therefore, there is no need to worry on this front, assured the Finance Secretary while responding to queries raised at the ASSOCHAM conference.

He went on adding that domestic capital market would also absorb the off shoot of crisis, arisen in European markets in the sense that FIIs investments into it would continue and the flight of their capital is unlikely to other destinations.

Mr. Chawla said that Indian economy would grow at anticipated rate of close to 8 percent. Even if crisis in overseas economy would temporarily go on as domestic market is their to provide cushion against such isolated cases of economic crisis.

The domestic economy, according to the Finance Secretary would move on to double digit growth rate but the challenge for policy maker will remain for this growth to be made inclusive.

On the issue of 3G Spectrum auction, Mr. Chawla said that the response has been extremely favourable as the bidding process was fair and transparent.  The government expects revenue generation through 3 G spectrum allocation on anticipated lines, said the Finance Secretary without unveiling estimated figures of revenue through 3G spectrum allocation.

In his keynote address, Wholetime Member SEBI, Dr. K.M. Abraham regretted that neither capital market regulator nor government and policy makers have devoted required time and energy to evolve measures to ensure inclusive growth.

According to him, not much of efforts have been made on policy front for encouraging financial institutions and commercial banks to ensure financial inclusion for masses belonging to countryside and this is one reason that the growth so far remains exclusive.

Dr. Abraham emphasized the need for expanding banking net in villages as their capital levels are rising because of various social schemes of UPA government to bring in this capital for much more productive use.

Mr. Joseph Massey, MD & CEO, MCX-SX in his observation said that an exchange for medium and small enterprises need to be set up so that their inclusion is done in the capital market for effective use and multiplying their capital.

Among others who spoke on the occasion included Mr. Venugopal N. Dhoot, Past President, ASSOCHAM and it’s Vice President, Mr. R.N. Dhoot who is also Member of Parliament, Mr. S. C. Aggarwal,  Co Chairperson, National Committee on Capital Markets & CMD, SMC Group and Mr. D S Rawat, Secretary General ASSOCHAM. (editor@thesynergyonline.com)

NIL RATE OF DUTY DRAWBACK ON COTTON YARN UNFAIR : NITMA

Thesynergyonline Export Bureau

NEW DELHI, MAY 04 :
NORTHERN India Textile Mills Association (NITMA) president, Mr. Ashish Bagrodia in a press statement issued today stated the Government's decision to withdraw duty drawback for cotton yarn is very unfortunate and unfair.

This move of the Government is also inequitable as all other export products are eligible for the refund of duties and the sudden withdrawal will have long term implications for the healthy development of the Sector in future.

Mr. Bagrodia pointed out that the Government has unfortunately set a precedent by making the duty drawback rate as nil which was recommended by the High Powered Committee after thoroughly verifying all the incidence of duties suffered by the spinning sector on its inputs.

He further said the Committee has recently sought for further details and industry has been demanding for the higher rate as State levies ranging from 4 to 5 per cent and transaction cost ranging from 9 to 12 per cent are not refunded.

Mr. Bagrodia stated that that the Government is itself questioning the rationale of its scheme which is essentially meant for reimbursing central indirect taxes suffered at the input stage in the manufacturing process.

The Government had earlier withdrawn 7.67 percent DEBP on cotton yarn and now suddenly withdrawn duty drawback, the intention of the Government is not understandable as drawback is not an incentive and it is only refund of duties, which is given for all the commodities with an objective of not exporting duties and creating a level playing field in the international market.

Mr. Bagrodia also pointed out that yarn price is determined by market forces depending upon the supply-demand and any move to bring artificial control on the intermediary products will only affect the functioning of the entire textile value chain in the globalize and liberalized environment.

Mr. Ashish Bagrodia further said that the member mills NITMA has recently acceded to the request made by the Union Textile Minister and volunteered themselves to reduce the yarn price in order to help the garmenting sector."

"Under such a situation, the negative move taken by the Government is very unfortunate for the spinning sector which has been generously extending its help for the growth of the handloom, power loom and garmenting sectors," he added.

He also pointed out that instead of giving additional benefits to the ailing / weak sectors, the move of the Government penalizing the spinning sector will be counterproductive and would totally discourage any further investment into this sector paralyzing the entire textile value chain. Therefore, he appealed to the Government to immediately withdraw the notification and reconsider its decision in the larger interest of export trade. (editor@thesynergyonline.com)

EXPORTS FROM SEZs GOES UP 10 TIMES IN 4 YEARS ; EPCES PLANS STRATEGY FOR MARKETING OF SEZs

Thesynergyonline Exports Bureau

NEW DELHI, APRIL 30 :
EXPORTS from SEZs during the year 2009-10 has risen to Rs.2,20,000 crore , representing a growth of 121 percent over the previous year, informed Mr R.K. Sonthalia, Chairman, Export Promotion Council for EOUs and SEZs (EPCES).

Mr Sonthalia met members of the EPCES Panel on SEZ Developers and other member SEZ Developers and informed them that response to SEZ scheme from international investors has been very encouraging so far. Foreign Direct Investment is one of the stated objectives of SEZs and for this SEZ Scheme offers one of the best competitive package. He urged them to work out a strategy for marketing of SEZs in India and abroad for bringing foreign and domestic investments in SEZs in India and also for generation of employment for the country.

He further mentioned that 105 SEZs are in operation against 350 notified SEZs out of 574 formally approved SEZs. He informed that there is space available for setting up of SEZ Units in existing SEZs. Member SEZ Developers should take initiative so that units come in operation in the vacant space in the existing SEZs. This strategy will help in increasing India's exports under SEZ Scheme.

Mr R.K. Sonthalia stated that EPCES has constituted a Panel on SEZ Developers so that all the SEZ Developers could come at one place and all the issues relating to the SEZ Developers could be discussed and taken up with appropriate authorities.

He further informed that as a result of participation of member SEZ Developers in a Seminar organized by EPCES in association with High Commission of India in Singapore, some of our member SEZ Developers are in touch with businessmen of Singapore and are placing before them opportunities available in SEZs in India. Since there is need for marketing of SEZs abroad, the Council in association with Department of Information Technology is taking a highpowered delegation of SEZ Developers of manufacturing hardware to Taiwan in the month of May, 2010.

Dr.L.B. Singhal, Director General, EPCES informed that exports from SEZs were Rs.22,000 crore, in the year 2005-06, when the SEZ Act was made operational on 10th February, 2006. These exports have gone up from Rs.22,000 crore in 2005-06 to Rs.2,20,000 crore in 2009-10 showing a growth of 10 times in 4 years. This shows in this period the direct employment provided by SEZs have gone up to approx. 5,00,000 people and additional investments of approx Rs.1,30,000 crore have taken place during this period. This shows the potential of the Scheme in increasing exports, providing employment and attracting investments.

He stated that EPCES, along with other organizations, have taken delegations of SEZ Developers to Japan, Singapore and have made presentations in Thailand, Hong Kong and other places.

He stated that the Finance Minister in the Budget has given a very positive signal about the SEZ Scheme by assuring a continued growth of SEZ Scheme. However, he requested that it should be categorically clarified that benefit of SEZ Scheme should be continued in the draft Direct Tax Code.

Mr Ajay Nijhawan, Convenor, Panel on SEZ Developers mentioned that their Panel has been functioning very effectively so that SEZ Scheme may be utilized by the SEZ Developers and their focus should be to fill up existing vacant space in the operational SEZs.

He further informed their Panel has identified different teams of 2 devlopers, who will identify the target markets and target customers. These sectors include Computer Hardware, Auto & Auto Components, Apparel & Textiles, Light Engineering, Food SEZ, Aero Defence, Renewable Energy, Gem & Jewellery, IT Software, Pharma/Life/Biotech SEZ and Logistics/FTWZ. (editor@thesynergyonline.com)

 
EPCES HOLDS PERFORMANCE REVIEW MEET WITH DGFT

Thesynergyonline Exports Bureau

NEW DELHI, APRIL 22 :
EPCES  held sectoral performance review meeting today with Mr R.S. Gujral, Director General of Foreign Trade in New Delhi.  A delegation comprising Mr A.K. Jain, Regional Chairman, EPCES,  Dr. L.B. Singhal, Director General, EPCES, Mr Ajay Nijhawan, Convenor, EPCES Panel on SEZ Developers, Mri D.P. Nanda, General Manager, Moser Baer India , Mr O.P. Kapoor, Dy.DG, EPCES etc. met Mr R.S. Gujral, DGFT and submitted suggestions of the Council for consideration. 

At the meeting, Mri Amitab Jain, Addl.DGFT, Mr V.K. Gupta, Addl.DGFT, Mri A. Komu, Addl.DGFT, Mri O.P. Hisaria, Jt.DGFT, Mri Rajiv Arora, Jt.DGFT, Mrs.Vibha Bhalla, Jt.DGFT, Mri Satyan Sharda, Jt.DGFT,  Mri Tapan Mazumder, Jt.DGFT, Mri A.K. Singh, Jt.DGFT, Mrs.V. Hariharan, Dy.DGFT  and other officers of the DGFT, Ministry of Commerce & Industry were also present.

At the outset, Mr A.K. Jain,  Regional Chairman, EPCES thanked Mri R.S. Gujral, DGFT for providing an opportunity to the Council to attend the sectoral performance review meeting.

Dr.L.B. Singhal, Director General, EPCES informed that SEZs have achieved remarkable growth of 121 percent over the previous year as exports from SEZs during the year 2009-10 is to the extent of Rs.2,20,611 crore.

He stated that exports from EOUs have gone down and EOU Scheme, needs to be taken care by attending certain structural issues like removal of cost recovery charges, doing away with procurement certificate etc.  He complimented SEZs on achieving this milestone  While presenting EPCES submission,   Dr.Singhal stated that the following issues need immediate consideration:
 
Issues relating to Foreign Trade Policy:
 
  Amendment to FTP 6.8(a) to provide that within the overall entitlement of 50% for DTA sale, EOU should be allowed to sell any products manufactured by them in DTA instead of the present policy of allowing DTA sale of similar goods only.

Drawback benefits on Furnace Oil to SEZ and EOUs.
EOUs should be allowed to keep PCFC (Packing Credit in Foreign currency) loan in EEFC Account.

Re-export of quality rejected materials may be permitted without necessarily taking replacement.

Exit from STPI Scheme FTP Paragraph No.6.18 STPI Scheme post March 2011.
Amendment in HBP Para 6.34(5) to provide for diversification in addition to broadbanding within the same unit.

Extending benefits of special schemeslike Vishesh Krishi & Gram Upaj Yojana Scheme, Focus Market Scheme, Focus Product Scheme etc. to all EOUs/SEZs irrespective of whether they are availing exemption from income tax or not.

Suggestion for bringing an amendment in Policy Circular No.56 dated 21.1.2009 to enable the exporters to have the flexibility in getting their claim granted without further delay.
Regarding DGFT Circular No.84(RE:2008)/2004-2009 (Chapter 5) dated 30.4.2009. (editor@thesynergyonline.com)

DGFT NEEDS TO CLARIFY CONFUSION ON REGISTRATION REALISATION OF FOREX

Thesynergyonline Exports Bureau

NEW DELHI, APRIL 20 :
THE Director General of Foreign Trade (DGFT) has notified the procedures for claiming the duty credits under the Status Holder Incentive Scheme (SHIS).(Already sent to the subscribers on 12th April-2010) He has also issued a Policy Circular clarifying listing of supporting manufacturers in the duty credit scrips. PN-54-09-Dt 8th April 2010 He needs to clarify an important confusion regarding realisation of foreign exchange.

Under the SHIS announced last year, status holders are eligible for duty credit for 1 per cent of the FoB value of exports during 2009-10 and 2010-11. For exports during the year 2009-10, the scrips can be claimed till March 31, 2011, and for exports made during 2010-11, the scrips can be claimed till March 31, 2012.

Till Electronic Data Interchange with Customs is put in place for the scheme, exporters have to file manual applications. The SHIS benefit is in addition to other benefits under FTP but exporters availing zero-duty Export Promotion Capital Goods (EPCG) scheme or Technology Upgradation Fund are not eligible for SHIS scrip in the same year. The scheme is also restricted to select sectors like engineering, basic chemicals, leather, textiles, jute, handicrafts and plastics.

The SHIS scrip is not transferable but the supporting manufacturer’s name can be endorsed on the scrip and upon such endorsement, the supporting manufacturer can use the scrip as a co-licensee. For getting the name of the supporting manufacturer endorsed, the merchant exporter (in whose name export proceeds are realised) will have to furnish necessary documents such as shipping bill.

The SHIS scrips can be used for duty payment on import of capital goods relating to the specified sectors. For this purpose, the sector’s name will have to be endorsed on the scrip. Imports of capital goods may be related to any of the select sectors mentioned in the Foreign Trade Policy (FTP), without any sector-wise value limitation. This very significant flexibility is available even if the scrip is used by listed supporting manufacturers. However, for import of any ‘restricted item’, the utilisation of the scrip will be allowed only if the beneficiary/holder has a separate licence/permission for import of the ‘restricted item’ in question.

Many exporters have obtained zero-duty EPCG authorisations in the year 2009-10. The FTP allows them to claim 1 per cent SHIS on exports made during 2009-10 and 2010-11. However, the related Customs exemption notifications says that in the year of imports under zero duty EPCG authorisation, SHIS benefit should not be availed.

DGFT says that monitoring of export proceeds realisation shall be done in terms of para 3.11.12 and 3.11.13 of the Handbook of Procedures, Vol. 1 (HB-1), implying that scrips will be granted on the basis of shipping bill. However, the declaration number 5 to the application form requires the exporter to claim SHIS only on exports for which payment has been received. At S No 3 (b) of the Chartered Accountant Certificate, it is required to be certified that ‘it has been ensured that in respect of export of goods, a shipment can be counted in applicants’ export turnover only if the realisation of export proceeds from overseas is in the applicant’s bank account’. DGFT has to quickly amend the suitable provisions so that the exporters do not face problems in giving suitable declarations or the Chartered Accountant Certificate required for claiming the SHIS scrips. (editor@thesynergyonline.com)

'SET REALISTIC TARGETS OF US$ 200 BILLION FOR INDIAN EXPORTS IN 10-11'

Thesynergyonline Export Bureau

NEW DELHI, MARCH 30 :
THE Associated Chambers of Commerce and Industry of India (ASSOCHAM) has recommended to the Commerce and Industry Ministry to set a realistic target of achieving export proceeds to an extent of US$ 200 billion for fiscal 2010-11 by sufficiently incentivising exports in terms of removal of excise and local levies on them.

In a representation sent to Commerce and Industry Minister, Mr. Anand Sharma, the ASSOCHAM president, Dr. Swati Piramal pointed out that overseas markets, especially those of economies of scale are likely to remain saturated in next fiscal also as these will take some more time to completely come out of recessionary mode.

Therefore, it would be prudent to set realistic targets for export proceeds for next fiscal in the Foreign Trade Policy to be unveiled on March 31, 2010 rather than making ambitious export programmes with such provisions as can promote India’s external engagements.

Dr. Piramal pointed out that India is likely to achieve export proceeds of less than US$ 185 billion in current fiscal against the targeted levels of US$ 200 billion. This is because only in three key areas, exports have so far shown some sign of recovery and these include gems and jewellery, apparel, textiles and other value added articles in engineering areas.

The export target of US$ 200 billion would be realistic according to the Chamber and can be achieved provided recommended measures of inentivising exports including removal of MAT on them are incorporated in the forthcoming Foreign trade policy.
In the forthcoming foreign trade policy, sufficient emphasis need to be exerted for export subsidization so that Indian products find space in overseas markets such as Africa, Latin America, Nepal, Sri Lanka, Bhutan, Bangladesh and Pakistan.

The imposition of Minimum Alternate Tax (MAT) or export proceeds should be avoided as government refunds it to concern exporters and virtually make no money on it. Export proceeds shouldn’t be subjected to MAT as it amounts to various bureaucratic hassles and encourages unnecessary government intervention as also prevent smooth flow of exports.

The Commerce & Industry Minister also needs to incentivize creation of separate births for export consignments in major and key ports as export consignments are held up for days together unattended at ports and lay scattered for want of space. This is because majority of India’s ports are over congested and no capacity expansion is taking place in many of them.

Therefore, capacity expansion drive of ports and airports should be done at accelerated pace for which incentives and fiscal support needs to b extended by government and financial institutions so that separate births are create in ports to preserve and then move export consignments to their required destinations.

Export logistics are again another problematic areas, which are totally inadequate and many times established international standards in India. these need to be set right.  Freight rates are too high for export as there are different slabs for different products.  The freight rate slab needs to be rationalized to meet the requirement of current times since the government has already done a rationalization on taxation front but freight rates continue to be cumbersome and adversely affect India’s export competitiveness.

The ASSOCHAM has also called for increase in duty drawback so that exports are duly incentivised.   In addition, the Chamber has sought RBI’s intervention so that commercial banks and other financial institutions extend necessary export credit to exports at cheaper interest rates as the ASSOCHAM still feel that financing exports need to be facilitated a little more since exports often complaint of liquidity squeeze as far as export financing is concerned. (editor@thesynergyonline.com)