In the wake of declining exports, the government on Thursday announced a slew of measures including extension of the popular EPCG scheme to all sectors and sops for Special Economic Zones (SEZs) to boost shipments.
The initiatives announced by Commerce and Industry Minister Anand Sharma as part of the annual supplement to the Foreign Trade Policy (FTP) are aimed at pushing exports which declined by 1.76 per cent to $300.6 billion during 2012-13 and pushed up the trade deficit to $190.91 billion.
The Export Promotion Capital Goods (EPCG) scheme, which allows exporters to import capital goods at zero duty, would be extended beyond March 2013 and would be applicable to all sectors, Sharma said.
"We have decided not only to extend the zero duty EPCG scheme beyond March 2013, but also merge it with 3 per cent EPCG scheme. Now, the zero duty EPCG benefit will be available to all sectors," the Minister said.
As regards the SEZ scheme, Sharma said, the minimum land area requirement for setting up such zones has been reduced to half and there would be no ceiling for IT and ITeS SEZs.
"We have taken note of the fact that there are acute difficulties in aggregating large tracks of uncultivable land which is vacant and contiguous and we have decided to reduce the minimum land area requirement by half for different categories of SEZs.
"...there would be no minimum land requirement for setting up IT/ITeS SEZs and only minimum built up area criteria would be needed to be met by SEZ developer," the Minister said.
On demands of a exit policy for the SEZs, Sharma said it has been decided to allow transfer of ownership and sale of SEZs units.
"I hope that the measures which we have announced on Thursday will go a long way in providing much needed support for exports," the Minister added.
Observing that the government has modified the SEZ policy after comprehensive and year-long consultation with the stake holders, Sharma hoped that the initiatives would "revive investor interest in SEZs".
The Minister said that the government will set up the 2nd Task Force to suggest measures for reducing transaction costs and added it will submit its report in six months.
Recommendations of the earlier committee had resulted in reduction of transaction costs, he said, adding, more is needed to be done.
Referring to the decline in exports and rising trade deficit, the Minister said that was "indeed a disturbing trend...it is a matter of concern that trade deficit which was $183.4 billion (in 2011-12) has increased to $190.1 billion in 2012-13".
India's export at $300.6 billion during 2012-13 was much below the target of $360 billion for the fiscal. It was $307 billion in 2011-12.
The exports, Sharma added, were also important to bring down the Current Account Deficit (CAD) which soared to historic level of 6.7 per cent of the GDP in the quarter ended December 2012.
Sharma said the World Trade Organisation's (WTO) recent report paints a disturbing picture of the global trade in the current year.
WTO in its latest report has revised the global trade growth projections downwards from 3.7 per cent to 2.5 per cent for the current year, which is less than half of the previous 20 years average, the Minister added.