FICCI favours lowering transaction cost in forthcoming FTP

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New Delhi, Apr 6 (UNI) In view of the current global slowdown and adverse impact of rupee appreciation on exports, FICCI today urged the government to reduce the transaction cost for the exporters in the forthcoming Foreign Trade Policy (FTP).

Besides, the chamber also said there is a need for having more dynamic export promotion measures and schemes to increase India's share in world exports in the FTP.

FICCI said the issue of bringing down transaction cost, which is one of the highest among India's competing countries, is an unfinished agenda of the country's present FTP and for this export and import procedures need to be simplified further.

Besides transaction cost, another unfinished agenda of the FTP was the neutralisation of incidence of all levies and duties on inputs used in exports.

The chamber emphasised that the supplement to the FTP also provide for a roadmap for phasing-in of a comprehensive duty neutralisation scheme, in place of DEPB, that would not only neutralise import duty but also other duties.

This new scheme should work on the fundamental principle that duties and levies should not be exported, it said.

In absence of suitable scheme for replacement of DEPB, the chamber said DEPB should be continued till the GST is introduced in 2010.

Citing the World Bank study, FICCI said transaction cost of exporting a container from India was 844 dollars, whereas it was 390 dollars in China; 432 dollars in Malaysia; 515 dollars in Pakistan; 416 dollars in Singapore and 615 dollars in Thailand.

In addition, the chamber has given specific suggestions to DGFT on schemes and policies related to foreign trade like EOUs, EPCG, SEZs.

It also urged the government to allow EOUs to import capital goods, infrastructure and construction materials duty free so as to help reduce their initial set up cost as is the case with SEZs.

It noted that this facility will make the products manufactured and exported from EOU more cost effective and competitive.

On EPCG, the chamber said since the duty has come down to 7.5 per cent on various capital goods and the net saving to exporter has reduced, the Government should consider having zero custom duty under the scheme to encourage exporters to utilize EPCG benefits.

FICCI noted that India's share was one per cent in world merchandise exports in 2006, and till the first half of 2007 the share remained only one per cent.


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