Govt extends EPCG scheme, allows smaller SEZs

As part of the trade policy announced by commerce minister Anand Sharma yesterday (See: Sharma proclaims Rs3,000 cr export package; industry unimpressed), the government announced a slew of measures, including extension of the Export Promotion Capital Goods (EPCG) scheme to all sectors and reduction in the minimum size of special economic zones (SEZs), to stem the steady decline in exports.

Commerce and industry minister Anand Sharma announced the measures as part of the annual supplement to the Foreign Trade Policy (FTP).

India's exports declined 1.76 per cent year-on-year to $300.6 billion during the 2012-13 financial year, pushing the country's trade deficit to $190.91 billion.

The Export Promotion Capital Goods scheme, which allows exporters to import capital goods at zero duty, would be extended beyond March 2013 and would be applicable to all sectors, Sharma said.

The EPGC scheme had two variants, namely, zero duty EPCG for a few sectors and 3 per cent duty EPCG for all sectors. The commerce ministry had also announced post export EPGC scheme during the last announcement of foreign trade policy on 5 June 2012, which was notified on 18 February 2013 by the CBEC.

The zero duty EPCG and 3 per cent EPCG scheme have now been been combined into a zero duty EPGC scheme covering all sectors.

''We have decided not only to extend the zero duty EPCG scheme beyond March 2013, but also merge it with 3 per cent EPCG scheme. Now, the zero duty EPCG benefit will be available to all sectors,'' Sharma said.

Besides, the government widened the 2 per cent interest subvention scheme for certain specific sectors like handicrafts, handlooms, carpets, readymade garments, processed agricultural products, sports goods and toys to include 134 sub-sectors of engineering sector and extended it up to 31 March 2014.

Smaller SEZs allowed
As regards the SEZ scheme, Sharma said the minimum land area requirement for setting up such zones has been reduced to half while there would be no ceiling for IT and ITeS SEZs.

''In view of the difficulties in aggregating large tracts of uncultivable land for setting up SEZs, while ensuring vacancy and contiguity, we have decided to reduce the minimum land area requirement by half,'' a commerce ministry statement said.

For multi-product SEZs, the minimum size has been reduced from 1,000 hectares to 500 hectares and for sector-specific SEZ from existing 100 hectares to 50 hectares.

To provide greater flexibility in utilising land tracts falling between 50-450 hectares, the government has introduced a graded scale for minimum land criteria, which would permit a SEZ an additional sector for each contiguous 50 hectare parcel of land.

This will also bring about more efficient use of the infrastructure facilities created in such an SEZ.

Further, the government has also allowed transfer of ownership and sale of SEZs units to cater to the demands of an exit policy for the SEZs, Sharma said.

''I hope that the measures, which we have announced today, will go a long way in providing the much-needed support for exports,'' the minister added.