This means if you export farm products worth Rs 100 crore you will be entitled to import any item worth Rs 5 crore free of customs duty. A duty-free imports entitlement certificate will be issued for these exporters, without any restriction on the kind of imports. Moreover, the entitlement would be encashable and freely saleable. An announcement is expected in the foreign trade policy. Quantitative restrictions on export of a host of agriculture products are likely to be lifted, too.

The moves are aimed to give a big push to agriculture sector, which is projected to take a big leap on the export front. Currently, India’s exports of agriculture and allied products (excluding tea and coffee) is estimated at over $ 20.2 billion. per annum. This includes export of fruits and vegetables worth over $1 billion, that grew at a robust rate of 65% in the Q1 of 2003-04.

Coupled with the tax break for fledgling agro and food processing units in the budget, the proposed sop is expected to be a major incentive for exporters of raw as well as processed farm products, sources said. A special feature of the proposed duty-free entitlement certificate is that the exporters don’t have to report incremental export growths to avail of the benefit.

As you export more, your duty-free entitlement swells at the same rate. The government’s decision to promote agriculture exports through special incentives comes at a time when rich countries have agreed to effect cuts on the domestic supports to their farmers.

Source: Economic Times, August 25' 2004