Some Comments on the Export Bonus, Export Promotion and Investment Criteria

Publication Year : 1966

One of the principal elements in the Third Five Year Plan strategy is to shift > the pattern of investment in favour of export-oriented industries [7]. According to the Plan targets, exports are to increase at a rate of 9.5 per cent per annum over the period 1964/65 to 1969/70, a rate of growth which exceeds the target rate of growth for G.N.P., estimated at 6.5 per cent per annum. Furthermore, the increase in exports is expected mainly in manufactured goods and in non-traditional items such as rice and fish [7]. Put in other terms, the Plan targets propose to divert to exports 10 per cent of additional manufacturing output produced during the Third Plan period. This target contrasts sharply with the actual ex¬perience of the Second Five Year Plan, when only 3 per cent of the additional output of the manufacturing sector was exported. Numerous policies have been used to stimulate exports. Some of these are tax incentives and export performance licensing which entitles certain export industries to additional import licences on the basis of their export performance. The key instrument in the export promotion strategy however, and the one which has received the most attention from economists, is the export bonus scheme. The scheme, first introduced in 1959 and scheduled to run till the end of the Second Plan period, has now been extended to cover the Third Plan as well.

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