The government yesterday unveiled its export-import (Exim) policy for the next five years that swept aside a host of controls on imports and simplified procedures to revive flagging exports.
Shrugging off the political uncertainty that has clouded the United Fronts coalition government, commerce minister B B Ramaiah announced the new policy which removed 542 items, 380 of them consumer goods, from the restricted list of imports, replaced the value-based advance licensing (Vabal) and passbook schemes for exporters with a new duty entitlement passbook scheme (DEBP) and announced several incentives to spur exports in the agriculture, software and electronics and gems and jewellery sectors.
The quantity-based advance licensing scheme, however, will continue with an easier export obligation period.
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The policy, to be effective from today, has reduced import duty under export promotion capital goods (EPCG) scheme from 15 per cent to 10 per cent and extended the zero-duty scheme to service providers like hotels, hospitals and air cargo complexes.
For the first time, the policy allowed imports of several consumer items. These include ice-creams, chocolates and food preparations and a wide range of processed food like soups, squashes, fruit juice, chewing gum, and corn flakes. Among the other items which have been allowed to be imported are tyres for cars and two-wheelers, toiletries, sewing machines, water coolers and diesel generating sets.
Of the 542 items removed from the restricted list, 150 goods have been shifted to the special import licence (SIL) list and 60 have been moved from the SIL to the free list.
Import restrictions have been placed on five items, including fire and burglar alarms and battery scrap, on environmental, security, safety and public health grounds.
Around 1,800 items remain on the SIL and approximately 2,500 items remain on the restricted list after the changes.
The policy extended major incentives to the agriculture sector, including double weightage in calculating eligibility for category holder and additional SIL for exports of fruits, vegetables, floriculture and horticulture products.
The policy has lowered the threshold limit for the zero-duty scheme to Rs 5 crore for the agriculture and allied sectors and has eased the export obligation norms for the exporters of farm products.
The electronic goods sector has been allowed to claim depreciation of up to 70 per cent in three years and granted permission for disposal of the goods on payment of applicable duty.
Software units have been allowed to import goods on loan from clients for a specified period and to sell on-line in the domestic market.
In line with the budget announcement, deemed export facilities have been extended to the oil and natural gas sectors. Domestic manufacturers supplying to EPCG licence-holders will be entitled to the deemed export duty drawback.
Domestic capital goods suppliers of a zero-duty EPCG licence-holder will also be allowed duty-free import of raw material.
The number of banks and institutions allowed to import gold for jewellery exports has been increased.
The Reserve Bank of India (RBI) will notify the list. Till now, only MMTC, STC, HHEC and the State Bank of India (SBI) were allowed to import gold.
Import of rough diamonds has also been liberalised. The export-oriented units (EOUs) and export processing zones (EPZs) in the sector have been allowed to sell up to 10 per cent of their production in the domestic market. Third-party exports have been permitted under the gems and jewellery replenishment scheme.
To spur exports from the North-East, the policy has offered additional one per cent SIL where the products from these states constitute 10 per cent of the total exports.
It also extends double weightage on such exports for category holders.
Additional SIL will also be given for exports to certain new markets and special import licence on export of the small-scale sector has been raised from one to two per cent.
To boost quality, SIL entitlement of exporters holding ISO 9000 certificates has been raised from two per cent to five per cent of f.o.b.
The commerce minister said two other issues have been taken up with the revenue department. These were extension of legal undertaking in lieu of bank guarantee to manufacturer-exporters under the EPCG and duty-exemption schemes and a green channel for clearance of export consignments to status holders and manufacturer-exporters.
The revenue department was formulating suitable guidelines for the green channel, he added.
The policy also reduced the number of forms to be filled by exporters to around 26, considered as the international norm. The director-general of foreign trades (DGFT) role has also been drastically reduced to usher in greater transparency in the policy.
NEW EXIM POLICY: PULLING DOWN THE BARRIERS
Vabal abolished, new simplified passbook scheme introduced
542 restricted items liberalised for imports
Special incentives for agro sector, hi-tech exports and small scale industry products
Increase in the number of agencies for stocking gold
Criteria for export house, star trading house status tightened
Import of rough diamonds liberalised
Gems & jewellery EOUs/EPZ units allowed to sell 10% of production in DTA
Payment of duty under EPCG scheme reduced to 10 per cent
Deemed export benefit to encourage domestic sourcing of inputs
Deemed export benefits extended to oil and gas sectors
Threshold limit under zero duty export promotion capital goods (EPCG) scheme reduced to Rs 5 crore for agri and allied sectors
Domestic tariff area (DTA) sale for export-oriented units/export processing zones in agro and allied sectors liberalised
Measures aimed at simplifying procedures and reducing the number of schemes
Additional special imprest licence (SIL) for exploration of new markets
Focus on quality through hike in SIL for ISO-9000 holders.
Special imprest licence facility extended to domestic capital goods suppliers
Double weightage to agro exports; exports from the north-east
Software units permitted on-line data communication for DTA sales also
Initial validity of duty-free licences extended to 18 months
Norms for disposal of scrap/rejects simplified
Electronic hardware units allowed to sell up to 50 per cent in DTA
Special depreciation norms for electronic goods up to 70 per cent in three years
All DGFT offices to be computerised by October 1, 1997
Anti-dumping mechanism strengthened