Stricter norms for exports schemes

Amendments to the Foreign Trade Policy, unveiled last week by Commerce Minister Kamal Nath, clearly showed that the finance and commerce ministries had tried to ensure minimal revenue loss on account of previous misuse.

As a result, several provisions in the policy have been tightened or withdrawn completely.

Norms for export-oriented units (EoUs) and one star export houses have been made more stringent while several concessions under schemes like the advance authorisation and Vishesh Krishi and Gram Udyog Yojana (VKGUY) have been withdrawn.

"While these changes are aimed at plugging the misuse of the schemes, exporters availing of these benefits would definitely be affected because of these modifications," Ajay Sahai, director-general, Federation of Indian Export Organisations, said.

Exports made through transshipment, deemed exports and exports made by special economic zones and EoUs will no longer be taken into account for duty credit entitlement under the VKGUY.

Also, credit scrip under the VKGUY will be granted at a reduced rate of 3.5 per cent of the Freight on Board (FOB) value of exports, against the usual rate of 5 per cent in case an exporter uses imported inputs.

The move is aimed at encouraging exporters locally under the scheme to procure inputs. The reduced credit rate of 3.5 per cent of the FOB value of exports will, however, not be applicable in case of imported catalysts, consumables and packing materials.

Norms for grant of one star export house status have also been tightened by including a provision that the status will be considered only in case an exporter has a minimum export performance of Rs 15 crore or more during any two years out of the current and preceding three years.