Government boosts incentives to give exports a leg-up as growth picks up for 3rd month

Source: Hindustan Times via Indian Economic Business News

The government on April 18th announced a host of measures to boost India’s exports including sops to special economic zones (SEZs). 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 USD 300.6 billion during 2012-13 and pushed up the trade deficit to USD 190.91 billion. These included easier land requirement norms, simpler exit options, cheaper credit and tax breaks for import of machinery. The new rules for SEZs will allow IT firms to claim tax breaks by moving offshore work to such duty-free enclaves. The earlier requirement of minimum 10-hectares for such campuses has been done away with and IT SEZs can now be set up if the these are spread across at least 100,000 square metres in seven major cities including Mumbai, Delhi and NCR, Chennai, Hyderabad, Bangalore, Pune and Kolkata. For category B cities, IT companies can set up SEZs even in a smaller built-up area of 50,000 square metres and for remaining cities in only 25,000 square metres. In view of the acute difficulties in aggregating large tracts of uncultivable land for setting up SEZs, the government also halved the minimum land area requirement to 500 hectares for multi-purpose SEZs and to 50 hectares for sector-specific SEZs. It has also been decided to permit transfer of ownership of SEZ units, including sale of units. Exports in March 2013 stood at $30.8 billion (Rs.1,69,400 crore), compared to $28.8 billion ( Rs. 1,58,400 crore) in the same month of the previous year. Imports dipped by 2.87% to $41.16 billion in March, leaving a trade deficit of $10.31 billion-down from $13.5 billion in March last year.