Offshore bank loans nixed

FOREIGN TRADE POLICY/ EOUs

Debonding rules simplified, to be based on self-assessment.

Commerce and Industry Minister Kamal Nath announced a package to provide a fillip to export oriented units but decided to end the facility of borrowings from offshore banking units (OBUs).

The policy also ended the system of reimbursement of central excise paid on bulk tea procured from auction centres. Further, the exemption from payment of service tax for EOUs, announced last year, was not operationalised due to opposition from the revenue department.

Officials said though the credit facility from OBUs was announced last year, the Reserve Bank of India did not notify the scheme and the provision had been deleted from the policy.

"It is a retrograde step," said LB Singhal, director-general Export Promotion Council for EOUs and special economic zones.

The units are, however, proposed to be permitted to claim income tax exemption on export proceeds realised within 12 months from the date of export.

This will require amendment to Section 10 B of the the Income Tax Act as it provides for realisation of proceeds within six months.

A simplified procedure for EOUs has been put in place aimed at self-assessment and time-bound disposal of applications together with liberalisation of debonding norms for these units. The debonding proposal is to be cleared within seven days.

The policy also allows EOUs the facility to transfer samples to other units on returnable basis within a period of 30 days.

Capital goods can also be transferred loaned to other units after informing the excise department and the development commissioner concerned.

This move is expected to help entrepreneurs, who have more than one EOU, to use capital goods efficiently.

For EOUs in the granite business, duty-free spares up to 5 per cent of the value of capital goods can now be imported for excavation purposes.

The government has also allowed units in the special economic zones to claim benefits of the duty entitlement passbook scheme, a duty neutralisation measure, in case of supplies made to the domestic tariff area.

The benefit was, however, retrospective for sales between April 2003 and May 11, 2004.