INDIA BUSINESS WORLD - FEBRUARY 2007
The Month that was ...

LABOUR-INTENSIVE EXPORTS MAY NOT GET TAX SOPS

Exporters of labour-intensive items like leather, value-added marine products, handicrafts and sports goods which were promised tax sops by the Centre last year are in for a rude shock. The government has decided to restrict the benefits of the focus products scheme, announced in the foreign trade policy last April, to only exports made from ports connected through electronic data interface (EDI).

The new restriction introduced through a public notice on January 17 will ensure that exporters based in small cities and towns like the leather and handicrafts hubs in Kanpur and Moradabad, respectively, do not get the benefit that was assured to them nine months back.

Of the 300-plus ports in the country, only 24 are connected through EDI. It is a pity that bulk of small exporters situated in small towns and cities away from EDI ports cannot benefit from the scheme.

Under the focus product scheme, exporters of leather, handicraft, handloom, valueadded fish products, sports goods & toys and fireworks are entitled for a transferable duty credit scrip equivalent to 2.5% of 50% of the total FOB value.

Sources in the commerce department said that the department was forced to issue the public notice restricting the scheme to exports from EDI ports as the finance ministry had refused to increase the corpus for the focus product and focus market schemes (both announced in the FTP last April) beyond Rs 660 crore. "The department had to devise a way to ensure that claims do not exceed the allocated amount.