Commerce Minister Kamal Nath announced the five-year trade policy for 2004-'09 at a news conference in New Delhi which will also allow duty-free import of capital goods in agriculture and consumable metals other than gold and platinum.

Speaking at the conference commerce minister said the policy has been designed to give a massive boost to exports and at the same create more jobs.

The policy provides for a 100 percent foreign direct investment to establish free trade zones and warehousing zones for major commodities, Nath said at the news conference.

The policy will also dispenses with the requirement of bank guarantee for exporters with a minimum turnover of Rs five crore. The abolition of bank guarantees for exporters is aimed at cutting down transaction costs in a highly competitive environment.

The policy also removes the bar on age of capital goods imported under export promotion capital goods (EPCG) scheme. As of now, an exporter cannot import a machine of more than ten years old and then avail EPCG benefit.

The five-year policy exempts export-oriented units from service tax and envisages establishment of a new handicraft special economic zone, bio-technology parks and an export promotion council for giving major thrust to service exports.

While India merchandise exports account for nearly 70 billion dollars annually, the services exports fetch an additional 50 billion dollars at present.

Nath said the policy seeks to double India share of international trade to 1.5 percent by 2009. The merchandise exports are expected to be doubled to nearly 150 billion dollar annually by 2009 and services exports are also expected to rise and touch the same figure by the end of this decade.