THE DIRECTOR General of Foreign Trade (DGF'I) has issued guidelines vide policy circular No.
23 (RE) 99 dated July 29, 1999 for import of second-hand capital goods. As per these guidelines, applications for import of second-hand capital goods shall be considered by the Inter-Ministerial Restricted Items Licensing Committee in the DGFI'. This committee will consider the applications inter-alia for capital goods (a) not older than five years, (b) older than five years but less than 10 years and (c) older than 10 years. It is said in the guidelines that the conunittee will normally allow import of such goods not older than five years automatically.
DGFT should be asked to clatify what is meant by the word 'automatically'. We understand that applications for the restricted licenses is to be made even if the capital good is not older than five years and if application has to be made, then what is 'automatic' approval and why then should an importer wait for 2-3 months to get the licence. The word 'automatically'
is a misnomer. The actual users should be allowed to import second-hand capital goods automatically without making an application to the DGFE May be DGFT, if he does not agree to this procedure, will impose a restriction on sale of such goods by the actual users for a period of not less than, say, next five years from the date of import.
Second, acceptable second-hand machines are being bought as these are available at throw-away prices but are still capable of producing quality goods. Machines with a life up to five years are hardly available as no user will sell them when their life is longer. Even if available, the prices of such machines are as high as the original costs and therefore its buyer cannot be globally competitive in the selling cost of products turned out by these machines.
The restriction imposed on import of second-hand capital goods, by way of obtaining import license. is not welcome. To add to it, submission of SIL (Special Import Licence) of the value three times of CIF value of capital goods to be imported adds to the landed cost of these goods, which leads to higher production cost.
When we talk of globalisation, our products should be internationally competitive. The imposition of additional cost by way of surrender of SIL to the government is, therefore, unwarranted. The time taken from the date
of submission of application for imports till the receipt of such licence
via the regional licensing authority ranges from 24 months. Will the
foreign seller of second-hand capital goods wait for the Indian importer for such a long time?
These are the times of liberalisation, not of imposing restrictions.
S S Gulati
Sr Vice-President
Bharat Gears Ltd
New Delhi
