Exporters get their share of poll goodies

MINI EXIM POLICY 2004

The government yesterday sought to extend the feel-good factor to the exporting community by simplifying export incentive schemes, reducing transaction costs and easing import restrictions on some key sectors, including automobiles, steel, textiles and food intermediaries. In addition, gold and silver have been put on the free import list.

The mini-Exim Policy, announced by Commerce and Industry Minister Arun Jaitley yesterday, also addressed exporters' constant complaints about lack of affordable export credit by introducing a Gold Card scheme for credit-worthy exporters with good track records. The details of the scheme would be notified by the Reserve Bank of India.

The announcements follow the Union Cabinet's recommendation to dissolve the Lok Sabha, in a bid to capitalise on an economic boom.

The government has already announced a series of tax cuts and populist economic measures, seen as an attempt to woo voters.

The services sector continued to be a focus area with Jaitley allowing duty-free imports by restaurants and small hotels earning foreign exchange.

Project exports emer- ged as a new thrust area with the government encouraging companies to execute turnkey projects abroad by ensuring political risk cover.

For merchandise imports, the government has made input procurement by exporters simpler to push India's share in global trade to 1 per cent ahead of the 2007 deadline.

The sops to hotels and restaurants are aimed at making India an attractive tourist destination. While hotels can import free liquor up to 5 per cent of their foreign exchange earnings, other service provi- ders like travel agents can now import office equipment and capital goods up to 10 per cent of their forex earnings. There is, however, a ban on dairy and agricultural products and car imports.

Similarly, removal of quantitative restrictions on gold and silver, which till now could be imported only through notified agencies like MMTC, would help in making India a global jewellery export hub.

A significant portion of the policy was devoted to making the Export Promotion Capital Goods and the Duty Free Replenishment Certificate (DFRC) schemes more exporter-friendly.

The government has brought old EPCG licences on a par with those issued this fiscal. The export obligations of old licences have been refixed at eight times the duty saved instead of five times the cost insurance freight (CIF) value.

Also, corporates can now fulfill their obligation by exporting products and services of group companies. They can also club EPCG licences and use rupee payments made for port handling services to meet their export commitments.

Under EPCG, the government has also eased the homologation norms for automobiles costing over $ 40,000 on CIF basis. Further, restrictions on import of prototypes have been eliminated for research and development purposes by actual users.

Under DFRC, fuel imports have been permitted by manufacturing companies for their own use. Earlier, the facility was available under the advance licence scheme.

The sensitive list for DFRC has also been pruned and the scheme will now be available on achieving the minimum threshold limit in one of the three preceding years.

The government has also decided to extend the deemed export benefit for items with zero customs duty. The move will encourage consulting companies to render services to project imports.

Finance Minister Jaswant Singh too had focussed on project imports in his mini-Budget announced earlier this month.

The deemed export facilities have also been made available to fertiliser and refinery projects that have spilled over from the 8th and the 9th plan period.

In addition, the equity base of Export Credit Guarantee Corporation has been hiked by Rs 300 crore to Rs 800 crore with a view to help it underwrite higher risks for project exporters in countries like Afghanistan, Iraq and some African nations with high political risk.

The government has also raised the ceiling on export of gifts like calendars, dairies, etc from Rs 1 lakh to Rs 5 lakh.