Financial Daily from THE HINDU group of publications
Thursday, Jan 29, 2004
Industry & Economy - Exim Policy
Govt eases foreign trade norms Free import of gold, silver; gold card scheme for exporters
New Delhi , Jan. 28
IN a major fine-tuning exercise of the 2002-07 Export-Import (Exim) Policy, the Government on Wednesday announced a string of trade facilitation measures to bring down transaction cost with a view to consolidating and accelerating incremental growth rate of exports to make the country a manufacturing hub for quality goods and services.
These include, among others, flexibility in discharge of export obligation (EO) by extending the scope to include exports of products/services by group companies, refixation of export obligation of past Export Promotion Capital Goods Scheme (EPCG) licences in line with existing policy (i.e., EO to be eight times the duty saved, instead of five times the CIF value), free import of gold and silver without the nod of designated agencies and a gold card scheme for credit-worthy exporters with good track record for easy availability of export credit on best terms to be worked out by the RBI.
Import of all kinds of capital goods (CGs) including office and professional equipment is now being allowed under the Duty Free Entitlement Scheme with the exception of agriculture/dairy products and cars, the Union Commerce and Industry Minister, Mr Arun Jaitley, said while unveiling a series of procedural simplification measures as part of the current year's Exim Policy.
Duty-free fuel could now be imported with actual user condition under duty-free replenishment certificate scheme (DFRC). The extension of new benefits pertaining to advance licence for intermediate supplies under DFRC scheme, reduction in payment of composition fee for extension of export obligation and linking it to duty-saved amount and reintroduction of advance licence for free of cost material are other benefits under various duty exemption schemes.
Non-tariff barriers applicable on imports for export production have also been rationalised for food and textile items.
In order to promote export-related infrastructure, rupee payments received for port handling services should be counted for discharge of export obligation under EPCG scheme.
Import of prototypes is to be allowed to actual users for research and development purposes without any limit, which is restricted to 10 numbers per annum hitherto. Annual ceiling on export of gifts has been raised from Rs 1 lakh to Rs 5 lakh.
Some of the procedural bottlenecks relating to `deemed exports' benefits have been removed through procedural simplifications. Deemed export benefits for items attracting zero per cent Customs duty would be granted, besides extending it to fertiliser and refinery projects spilled over from Eight and Ninth Plan periods.
In order to reduce transaction cost, fixation of drawback brand rates for deemed exports has been decentralised and delegated to DGFT regional offices.
In a bid to help Indian exporters in better risk management, equity base of Export Credit Guarantee Corporation (ECGC) is also being finalised by RBI to enable the exporters obtain export credit without hassle. This would ensure easy availability of export finance to Indian exporters at best terms and improve the competitiveness of Indian goods and services.
National Export Insurance Account is being created for ECGC to underwrite high value projects implemented by Indian companies and details would be worked out in consultation with the Ministry of Finance. Heritage hotels, one and star hotels and stand alone restaurants also get the benefits of duty-free imports admissible to tourism sector.
Justifying the fine-tuning of the current year's Exim Policy, Mr Jaitley said, "The principal reason why we have taken these steps is that ordinarily the Exim policy is to be amended on March 31, every year and it is no secret that March 31, 2004 this time the model code of conduct of Election Commission would be in force and it is only justified that Exim Policy is not announced."
As far as the Exim Policy goes, he said, it could be presented only after the election. However, he hastened to add that the measures announced today were only "facilitation measures in relation to last year's Exim Policy being announced earlier at this stage because exports are passing through a very challenging time."
Asked about the waiver of fee by 50 per cent to exporters using online mode for licences, the Minster said that this was only to "incentivise" the online filing of application. He said that initially for 7 to 8 months, export growth was held back but now the turnaround has taken place with exports shooting up by 42 per cent in dollar terms in December. He said the US economy grew by 8 per cent in the third quarter and this would have a snowballing effect on India's exports in the remaining months of the current fiscal.
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