Kamal Nath did not deserve the applause that he received

EXIM MATTERS

The spate of amendments to the Foreign Trade Policy (FTP) and Handbook of Procedures (HB) continues unabated. Some of these amendments reverse the changes that Commerce Minister Kamal Nath announced with a lot of fanfare.

In the first three months of this financial year, 10 notifications were issued. In the next three months, 22 notifications have been issued amending the FTP. Till early July this year, the Director General of Foreign Trade (DGFT) had issued 13 public notices to amend the handbook of procedures notified this April. After July, 46 public notices have amended the handbook. No policy circulars came through during April-July this year but 14 have come through in the last three months.

Most of the changes have come about because a new team at the office of the DGFT is revisiting each provision of the FTP and HB. But some changes are also due to refusal of the finance ministry to accept the changes that Kamal Nath had announced.

While releasing the annual supplement to the FTP this April, Nath referred to the export promotion capital goods (EPCG) scheme and said, "I am now doing away with the present restrictive requirement of block-wise fulfilment of export obligations. This should not only reduce transaction costs and paperwork, but also minimise the effect of cyclical fluctuations in the international markets."

The relevant provisions in the HB were accordingly amended. But the finance ministry did not amend its notification no. 97/2004-Cus. dated September 17, 1994. Now, the DGFT has fallen in line and the provisions of Para 5.80 to 5.83 have been restored in the HB in exactly the same wordings that existed before Nath made the announcement this April.

Similarly, Nath had announced in April this year that installation certificates on imported capital goods can now be obtained from a chartered engineer instead of only from an excise official. Accordingly Para 5.3.2 of the HB was amended to say that "authorisation holder shall produce to concerned RA a certificate from jurisdictional central excise authority or an independent chartered engineer confirming installation of capital goods at factory premises of authorisation holder or his supporting manufacturer(s) vendor(s) within six months from the date of completion of imports.

Now, the same Para has been amended to say that "authorisation holder shall produce to the concerned RA a certificate from the jurisdictional central excise authority, confirming installation of capital goods at factory premises of authorisation holder or his supporting manufacturer(s)/vendor(s) within six months from the date of completion of import. In the case of import of spares, the installation certificate shall be submitted by the authorisation holder within a period of three years from the date of import. However, in case of units not registered with central excise authorities, the authorisation holder shall produce to the concerned RA, a certificate from an independent chartered engineer confirming the said installation of capital goods/spares."

The DGFT has also restored the provision in Para 5.3.1 of HB to say that after the issue of the EPCG authorisation, the regional authority will forward a copy of the EPCG authorisation to the concerned jurisdictional central excise authority.

Nath won applause for announcing helpful changes but as the recent changes once again show, the applause was undeserved because he had not taken the finance ministry into confidence before making the announcements.

tncr@sify.com