India Inc pronounces foreign trade policy as proactive

Our Economy Bureau
03 September 2004

New Delhi: India Inc dubbed the government''s five-year foreign trade policy as proactive and having all the elements to boost exports, add jobs, improve competitiveness, reduce transaction cost and bring in some procedural simplification.

While industry leaders are looking at the fine print to take on commerce minister Kamal Nath who will interact with the industry bodies on Wednesday, the industry is more than satisfied as against what they got from finance minister P Chidambaram in the Budget.

"It is comprehensive and forward looking," says Sunil Kant Munjal, president of CII. "It presents a vision of India as a ''global hub'' for manufacturing, trading and services." However, Munjal admits that CII would have liked to see policy statements on special economic zones and free-trade agreements.

It is refreshing and challenging to exporters," says Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO). "The bold sector-specific initiatives will have a strong impetus to growth of exports as well as employment." FIEO has reason to smile as service tax is totally banished from exporters.

The removal of restrictions on import of second-hand capital goods has brought in some good news as well as bad news. While the good news is that companies will be able to bring in machinery — however old it might be, from the overseas market — it will have significant impact on capital goods manufacturers like BHEL, L&T and ABB among others.

"The entrepreneur will decide whether to buy from the domestic market or buy second-hand machinery abroad," says YK Modi, president of FICCI. Industry leaders say Indian companies will benefit, as second-hand machinery is available at throwaway prices as manufacturing units are increasingly shutting down in European and US markets.