I read this news report recently...thought it would be of interest.

The Ministry of Commerce has taken the telecom sector out of its export promotion scheme - Served from India Scheme (SFIS) - with retrospective effect.

The decision to bar the telecom sector from this benefit had already been taken while framing the Foreign Trade Policy (FTP) 2009-14. However, following representation from the sector, discussions were held with the sectoral regulator" the Telecom Regulatory Authority of India (Trai) "before starting the implementation. After the discussions, it is now decided that the scheme will not only be made unavailable to the sector from 2009-10 onwards but also the ineligibility will be made effective with retrospective effect since 2005," said an official closely associated with the development in the ministry.

This means, all cases where the telecom providers have availed of the benefits of this scheme will be opened for scrutiny and excess grants will be recovered since 2005.

Industry sources said this would have considerable effect on the sector players since revenue from overseas operations for telecom players roughly size up to Rs 7,000-8,000 crore per annum. If the players are barred from 2005 onwards, which is even before the last foreign trade policy 2004-09, the recovery of the amount will have a substantial impact on the governmentâs revenue and loss for the sectoral players.

SFIS is a nodal export promotion scheme for the service industry where an exporter avails of duty entitlement as in terms of exemption from paying an import duty up to 10 per cent of the export turnover. The import is strictly restricted to capital goods and these benefits are non-transferrable.

Mr. Neeraj Sharma

Neeraj Electronics

CEO, Neeraj Electronics
Jorhat, India

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