The spectre of rising inflation cast its shadow on the foreign trade policy (FTP), with the Centre today using the unveiling of the annual supplement to announce a ban on cement exports and removal of incentives for steel exports.

The policy coincided with the release of government data on prices that put the inflation at a 40-month high of 7.41 per cent fuelled by among other things a 5.6 per cent rise in steel prices during the week ended March 29. “We have to ensure that inflation does not happen at the cost of exports,” commerce & industry minister Kamal Nath said, clarifying that domestic availability of goods would get precedence over anything else.

“To curb inflation in essential commodities, the government has banned the export of non-basmati rice, edible oils and pulses. Benefits of the DEPB (Duty Entitlement Passbook) scheme have been withdrawn on the export of rice, cement and primary steel items. We are also withdrawing the incentives under promotion schemes on the export of cement and primary steel items,” he said.

The minister’s FTP speech outlined the steps the government will take to encourage exports in fiscal 2008-09. The government announces measures every year as supplements to the five-yearly FTP. The present policy was announced in 2004 and today’s measures marked the end of the current series. To help cushion exporters from the strengthening rupee, the government extended by another year the interest subsidies given to them in sectors affected by the appreciation, as well as to small & medium enterprises.

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