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Present FDI Policy on Agriculture
and Plantation
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02. TRADE AND ECONOMY |
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RBI
LAUDS SEZ SCHEME |
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The
Reserve Bank of India (RBI) in its Annual Report for the year 2005-06
has praised the Special Economic Zone (SEZ) Scheme, saying that “
the simplification of procedures and tax breaks as envisaged by the
(SEZ) Act (2005) are expected to attract investments of about Rs.
1, 00, 000 crore and help create 500,000 jobs”. |
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In paragraph 1.1.38
of the Report running into about 150 pages excluding the annexures,
it is stated that “ In order to instil confidence in investors
and signal the government’s commitment to a stable Special
Economic Zone (SEZ) policy regime, a comprehensive Special Economic
Zones Act, 2005, Act has been enacted. The SEZ Act 2005, which
came into force on February 10, 2006 is expected to facilitate
large flow of foreign and domestic investment to the SEZs, and
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contribute to improvements
in infrastructure and productive capacity, generation of additional
economic activity and creation of employment opportunities”.
The SEZs are envisaged to act as catalysts for growth. The simplification
of the procedures for development, operation and maintenance
of the SEZs and the fiscal incentives are expected to spur investment
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“industrial
activity”, it adds ( Box 1.2, page 8 of the RBI Annual
Report).
Commerce Ministry’s assessment also indicates that SEZs
are likely to create large scale direct and indirect employment.
The total employment that would be created by December 2007
is 500, 000. Foreign Direct Investment (FDI) of the order of
Rs 25,000 crore ( US $ 5 to 6 billion ) is also expected by
the end of December 2007 in infrastructure development of the
SEZs and in setting up of the units in the Zones. |
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Engineering emerges as largest
contributor to India's exports
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The engineering sector has emerged
as the largest contributor to India’s total merchandise exports,
even ahead of gems & jewellery, with exports of engineering
goods from India having crossed US$5 billion in the first quarter
of the current financial year 2006-07, representing an increase
of 20% over last year.
This was indicated by Shri Kamal Nath, Union Minister of Commerce
& Industry, at the All India Awards Function for Outstanding
Export Performance organised by the Engineering Export Promotion
Council (EEPC) in Chennai
Giving details of the performance, Shri Rakesh Shah, Chairman,
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EEPC, in his keynote address said thatduring the first quarter
of this fiscal (April-June 2006) US $ 5.5 billion worth of engineering
items were exported from India. At this rate, total engineering
exports would touch US $ 23 billion in 2006-07 and “this would
be the highest among all items in overall merchandise exports from
India”, Shri Shah said.
Shri Kamal Nath also called for rapid development of Engineering
Process Outsourcing (EPO) services from India as it would have a
far-reaching impact on the Indian engineering industry as a whole.
“The spurt in engineering outsourcing can be gauged from the
fact that a number of giant automotive and aerospace companies such
as Ford Motor Company, General Motors, Boeing
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and Airbus have some
of their engineering done by Indian technology companies. In addition
to that, virtually every semi-conductor manufacturing company, electronic
goods maker and mobilehandset vendor have some work outsourced to
India.
The EPO market in India has the potential to exceed US $ 40 billion
by 2020, which will catapult India’s market share in the same
category to 30 percent from the current 12 percent. To tap this EPO
market all the important stakeholders, including the Government, academic
institutions, service providers and trade bodies will need to boost
investments in infrastructure and improve marketing efforts”,
he said. |
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TOWNS
OF EXPORT EXCELLENCE
Eleven towns in the country have emerged as dynamic industrial
clusters, contributing significantly to India’s exports.
These eleven towns are: (1) Tirupur, Tamil Nadu – hosiery;
(2) Ludhiana, Punjab – woollen knitwear; (3) Panipat, Haryana
– woollen blanket; (4) Kanoor, Kerala – handlooms;
(5) Karur, Tamil Nadu – handlooms; (6) Madurai, Tamil Nadu
– handlooms; (7) AEKK (Aroor, Ezhupunna, Kodanthuruthu
& Kuthiathodu), Kerala – seafood; (8) Jodhpur, Rajasthan
– handicraft; (9) Kekhra, Uttar Pradesh – handlooms;
(10) Dewas, Madhya Pradesh – pharmaceuticals; and (11)
Alleppey, Kerala – coir products.
Besides the ASIDE (Assistance to States for Infrastructure Development
for Exports) scheme granted to state governments for developing
export infrastructure, the facilities granted to Towns of Export
Excellence include common service and the facility of the EPCG
scheme.
Recognised associations of units are able to access the funds
under the Market Access Initiative (MAI) Scheme for creating
focussed technological services.
In order to grant recognition to these industrial clusters with
a view to maximising their potential and enabling them to move
higher in the value chain and tap new markets, it was decided
that selected towns producing goods of Rs.1000 crore or more
will be notified as Towns of Exports Excellence on the basis
of potential for growth in exports. |
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However, for the
Towns of Export Excellence in the Handlooms, Handicraft, Agriculture
and Fisheries sector, the threshold limit is Rs.250 crore.
“INDIA WILL NOT COMPROMISE INTEREST OF FARMERS”
Shri Kamal Nath, Union Minister of Commerce & Industry,
made it clear that the interests of India’s farmers and
infant industries cannot and will not be compromised in the
World Trade Organisation (WTO) negotiations under the current
Doha Round, even as he underlined India’s continuing commitment
to a rule-based multilateral trading system. Delivering a Special
Address on “WTO and the Doha Development Agenda: The Way
Forward” at a meeting jointly organised by the Federation
of Indian Chambers of Commerce & Industry (FICCI) and Indian
Council for Research on International Economic Relations (ICRIER),
Shri Kamal Nath urged the developed countries to recognise that
development dimension was at the core of the Doha Development
Agenda and said India looked forward to the developed countries
taking a leadership role in moving the Doha process forward
by correcting distortions in the global trading system, especially
in agriculture.
FDI IN MANUFACTURING SECTOR
Foreign Direct Investment (FDI) up to 100% is permitted on the
automatic route in all manufacturing activities except:-
(i) Defence Industry (where there is an equity cap of 26% and
entry rute
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restriction);
(ii) Cigars & Cigarette manufacturing (where there is an
entry route restriction);
(iii) Where provisions of Press Note 1(2005 series) are attracted
i.e. where the foreign investor has an existing joint venture
in India in the same field(where there is an entry route restriction);
(iv) Where more than 24% foreign equity is proposed to be inducted
for manufacture of items reserved for Small Scale sector(where
there is an entry route restriction). This was stated by the
Minister of State for Industry, Shri Ashwani Kumar in a written
reply to a question in Lok Sabha
INCREASE IN IMPORT OF ITEMS
The top commodities whose imports have increased during the
last three years include petroleum crude & products; machinery
except electrical and electronics; electronics goods; gold,
pearls, precious and semi-precious stones, etc. Most of the
commodities recording a higher growth of import reflect the
growth of demand for raw-materials, intermediate products and
capital goods from the manufacturing sector or growth of commodity
prices as in the case of crude oil. Imports are largely governed
by the emerging needs of the economy and international prices
of commodities. The Government normally does not take measures
to restrict imports which may lead to dampening of the growth
in the economy and resurgence of inflationary pressures. |
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