Wednesday, May 18, 2011

Briefly explain the latest trade policy measures for 2008-09 and 2009-10. Refer to the recent Economic Survey.

Briefly explain the latest trade policy measures for 2008-09 and 2009-10. Refer to the recent Economic Survey.

Trade policy measures in 2008-09 - Measures taken by the Government
• Interest subvention of 2 per cent from 1.12.2008 to 30.9.2009 to the labour-intensive sectors of exports such as textiles (including handloom), handicrafts, carpets, leather, gems and jewellery, marine products and small and medium enterprises.
• An additional allocation for export incentive schemes of Rs. 350 crore.
• Inclusion of handicrafts items in Vishesh Krishi and Gram Udyog Yojana (VKGUY)
• Support under VKGUY scheme for some additional commodities.
• Extension of market-linked focus product scheme for bicycle parts, motor cars and motor cycles, apparels and clothing accessories, auto components, etc.
• Provision of additional Rs. 1,100 crore to ensure full refund of claims of CST/terminal excise duty/duty drawback on deemed exports.
• Continuation of duty entitlement passbook (DEPB) scheme up to December 31, 2009.
• Restoration of DEPB rates for all items where they were reduced in November 2008 and increase in duty drawback rates on certain items effective from September 1, 2008
• Backup guarantee made available to ECGC to the extent of Rs. 350 crore to enable it to provide guarantees for exports to difficult markets/products. Funding for ECGC also provided from the National Export Insurance Account for providing higher risk cover to MSME exporters and select export sectors.
• Provision of additional funds of Rs. 1,400 crore for textile sector to clear the backlog claims of Technology Upgradation Fund (TUF).
• Export duty on iron ore fines eliminated, and for lumps, reduced to 5 per cent.
• Some pending issues relating to service tax refund on exports resolved.
• For fast track resolution of a number of procedural issues to reduce delays for the exporters, a committee constituted under the chairmanship of the Finance Secretary including Secretaries of the Department of Revenue and the Commerce.
• Excise duty reduced across the board by 4 per cent for all products except petroleum products and those products where current rate was less than 4 per cent.
• The guarantee cover under credit guarantee scheme for micro and small enterprises on loans doubled to Rs. 1 crore with a guarantee cover of 50 per cent. The guarantee cover extended by credit guarantee fund trust increased to 85 per cent for credit facility up to Rs. 5 lakh. The lock-in period for such collateral free loans reduced.
• CVD on TMT bars and structurals and on cement removed.
• Exemption from basic customs duty on zinc and ferro alloys withdrawn.
• Duty credit scrips under DEPB scheme and Freely Transferable Scrips under chapter 3 of FTP shall now be issued without waiting for realization of export proceeds.

• Rs. 325 crore outlay earmarked under the promotional schemes for leather, textile etc. for exports made with effect from 1.4.09.
• Benefit of 5 per cent under FPS has been notified for export of handmade carpets, in lieu of 3.5 per cent benefit allowed earlier under VKGUY scheme.
• Technical textiles and stapling machine have been added under the focus product scheme. An additional benefit of 2.5 per cent is notified for export of dried vegetables under VKGUY.
• STCL Limited, Diamond India Limited, MSTC Limited, Gem & Jewellery Export Promotion Council and Star Trading Houses (for gem and jewellery sector) have been added under the list of nominated agencies for the purpose of import of precious metals. The procedure and monitoring provisions for implementation of these additional agencies have been announced.
• Authorized person of gem & jewellery units in EOU allowed personal carriage of gold in primary form up to 10 kilograms in a financial year subject to RBI and customs guidelines.
• Export obligation period against advance authorizations extended up to 36 months without payment of composition fee in view of the present global economic slowdown.
• Supply of an Intermediate product by the domestic supplier directly from their factory to the port against advance intermediate authorization for export by ultimate exporter has been allowed.
• Elimination of import duties for naphtha for use in power sector.
• Simplification of export licensing requirements for blood samples
• Elimination of import duty on rough cubic zirconia and reduction in import duty on polished cubic zirconia and rough corals.

Measures taken by the RBI
• Increase in liquidity to the banks for improving credit flow
• Reducing CRR, SLR, repo rate and reverse repo rates
• Putting in place a special refinance facility for banks for the purpose of extending finance to exports, micro and small enterprises, mutual funds and NBFCs. Provisioning requirements have been lowered. Export credit refinance facility for commercial banks increased from 15 per cent to 50 per cent of the outstanding rupee export credit.
• Refinance facility to the EXIM Bank for an amount of Rs. 5,000 crore for providing pre-shipment and post shipment credit in rupees or dollars.
Increase in Forex liquidity:
• RBI's assurance for continued selling of foreign exchange (US$) through banks, to augment supply in the domestic foreign exchange market.
• Ceiling rates on export credit in foreign currency raised from LIBOR+100 basis points to LIBOR+350 basis points subject to the condition that the banks will not levy any other charges, i.e., service charge, management charge, except for recovery towards out of pocket expenses incurred.
• The ceiling on interest rates for non-residents deposits raised.
• Banks' overseas borrowing limits increased and ECB borrowing norms eased; "all in cost" ceiling of such borrowings to be removed under the approval route of RBI.
• RBI to provide forex liquidity to Indian public and private sector banks up to June 30, 2009, through forex swaps of tenure up to 3 months.
Easing of credit terms:
• Enhancing the period of pre-shipment and post-shipment Rupee Export Credit by 90 days each;
• Increasing the time period of export realization for non-status holder exporters to 12 months;
• Authorized dealers category-I banks permitted to consider applications for premature buy-back of FCCBs from their customers.
Other announcements made by the PSU banks consequent to measures announced by RBI:
i) Reduced interest rate for micro enterprises and SMEs;
ii) PSU banks will grant need-based ad hoc working capital loan of up to 20 per cent of their overall credit facility if it is less than Rs. 10 crore.
iii) For export units, margin money on guarantees will be reduced

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