Column : Protect from protectionism
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FTP hasn't tackled the problem of non-tariff barriers that could potentially affect Indian interests
The unveiling of the annual supplement to the Foreign Trade Policy (FTP) 2009-14 would generally have received much less attention but for the fact that this is an exceptional phase for the Indian economy. The country needs to enhance its engagements with its trading partners in particular, and improve the conditions offered to the exporters so that they are able to seek new markets, while at the same time increasing their presence in some of the more dynamic regions. There was, therefore, a need to have a re-look at the policies and instruments that can steer the exports in the desired direction.
The additional reason for the re-look at the FTP comes on the back of the reports that international trade faces greater challenges from protectionist forces than in the previous years. A joint surveillance report of the World Trade Organisation, the United Nations Conference on Trade and Development, and the Organisation of Economic Cooperation and Development unveiled recently has concluded that protectionist forces have become stronger since the beginning of the year, and this could seriously undermine the pace of the recovery of the global economy.
In keeping with the imperatives, a number of steps have been taken to promote exports in the supplement to the FTP that the commerce minister has announced. A number of labour-intensive sectors (such as toys, sports goods, processed agricultural products and ready-made garments) can now benefit from the 2% interest subvention scheme, hitherto only available to handicrafts, handlooms, carpets, and small and medium enterprises.
The zero duty Exports Promotion Capital Goods (EPCG) Scheme, which was introduced to encourage technological up-gradation of the export sector, has been extended to the end of the current financial year. Besides, the scheme has been enlarged to cover units that are currently availing or have earlier availed the benefits of Technology Up-gradation Fund Scheme (TUFS). At present, the EPCG Scheme exempts a number of sectors (like handicrafts, handlooms, cottage sector, tiny sector, agriculture, aquaculture, horticulture, pisciculture, viticulture, poultry and sericulture) from the condition of maintenance of average level of exports. Three new sectors (carpet, coir and jute) have been included in this list of beneficiaries.
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