Page 247 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers

Notes There is no sub-usage variance.
Verification:

1. Sales Value Variance = Sales Price Variance + Sales Volume Variance
900(F) = 400(F) + 500(F)
2. Sales Volume Variance = Sales Mix Variance + Sales Sub-usage Variance
500(F) = 500(F) + 0

Case Study

or an eagerly awaited policy announcement, the FTP does not have anything that
can enthuse exporters. The highly ambitious export targets such as doubling India’s
Fshare in global trade by 2020 have been envisioned regrettably without any strategy.
The sentiments to support labour intensive sectors are noble, but the contents belie hopes.
Instead, the FTP tries to appease sectional interests of various commodities.
The key features of the present FTP are inclusion of additional markets in Focus Market
Scheme, extension of product coverage in Focus Product Scheme, zero duty under EPCG
and reduction in transaction cost. Unfortunately, the policy falls short of expectations in
all these areas. For instance, the list of markets included in the Focus Market Scheme is
totally at variance with products covered and in fact are akin to square pegs in round
holes. Including markets like Vietnam and Cambodia for garments has no meaning as
these countries are net exporters of apparels.
Similarly, exclusion of South Korea from the list of markets is inexplicable, especially in
the context of the recent Comprehensive Economic Partnership Agreement with that
country. An imaginative policy should have leveraged the linkages established under
various regional trade agreements aimed at augmenting bilateral trade by including
these countries in the list of Focus Market Scheme. Further, excluding cotton fabrics while
including synthetic fabrics from the Focus Market Scheme is also inexplicable, especially
to countries like Vietnam, Cambodia and South Africa that are leading producers of
cotton garments.
Similarly in the Focus Product Scheme, including handloom is a red herring, as the
distinction between powerloom, handloom and mill sector was eliminated after the fiscal
reforms in the textile sector. The requirement of “Handloom Mark” has been dispensed
with, that would reopen the old debate on what constitutes handlooms, thereby
encouraging some to take undue advantage.

The policy, while exhorting special measures for labour-intensive sectors, has conveniently
ignored the fast developing home textile sector. While the garment sector has been accorded
2% incentives for exports to USA and EU under a scheme valid up to 30 September 2010,
the home textile sector which is equally labour-intensive has been denied the benefits.
The inclusion of home textiles would have given benefits to clusters of madeups based in
Karur, Erode, Sholapur and Panipat. That apart, the benefits of additional duty scrip of 1%
granted to status holders for import of capital goods and zero-duty EPCG scheme are non-
starters in the textile sector as the beneficiaries under TUFs scheme have been denied the
privileges. The reforms relating to the transaction cost like reduction in application fees,
Contd...

242 LOVELY PROFESSIONAL UNIVERSITY