Financial Daily from THE HINDU group of publications
Saturday, Apr 13, 2002
Industry & Economy
No relaxation of curbs on export units: DGFT
The Director-General of Foreign Trade, Mr N.L. Lakhanpal, (right) with the Chairman of the Electronics and Comupter Software Export Promotion Council (ESC), Mr Vivek Singhal, addressing an exporters' meet on Exim policy in the Capital on Friday.
NEW DELHI, April 12
THE Director-General of Foreign Trade, Mr N.L. Lakhanpal, on Friday virtually ruled out the withdrawal of the new conditions imposed in the Exim Policy on the Export Oriented Units (EOUs)/Export Processing Zone (EPZ) units that are sub-contracting job work.
At an Exporters' Meet on New Exim Policy 2002-07, organised by Federation of Indian Export Organisations (FIEO) here, Mr Lakhanpal said these conditions have been introduced only after it was noticed that several EOUs were rampantly misusing the facilities provided to them.
A number of garment exporters having EPZ units/EOU units demanded the removal of the new conditions and held that it would hit small manufacturers. It was also highlighted that most of the job workers in the Domestic Tariff Area (DTA) were very small units and not required to register with the Central Excise Range.
"The ability to get job work done from small units in the DTA at a low cost has been the strength of the Indian garment industry. The export efforts of small manufacturing units will suffer, if such conditions were to be imposed," a garment exporter said.
An exporter said the stipulation requiring job work material samples to be drawn and sent for approval to the jurisdictional customs and central excise authority of the sub-contractor in the DTA area will result in huge delays in the execution of export orders.
Mr Lakhanpal, however, pointed out that "only self contained garment units will be able to survive in a post-MFA regime when all quotas will be dismantled" and therefore all garment manufacturers should strive to develop such "self-contained units" rather than looking at sub-contracting job work.
The new Exim Policy for 2002-07 stipulates that goods would be allowed to move out of EOUs/EPZs into DTA for sub-contracting of production process only after initial processing. Further, the job-worker's unit in the DTA should be Central Excise registered.
It also stipulates that the samples of the goods sent for sub-contracting should be drawn and sent in advance to the jurisdictional Customs or Central Excise Authorities of the sub-contractor in DTA. However, this will not be required in case the sub-contracting is done through another unit in the same EPZ.
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