New exim policy to cut export costs
894 items on OGL list
Tribune News Service

NEW DELHI, March 31 - The government today announced a major policy package for trade reforms incorporating measures aimed at cutting transaction cost of exporters.

The modified exim policy for 1999-2000, which was announced by the Union Commerce Minister, Mr Ramakrishna Hegde at a news conference here today, includes special incentives for those exporting more than half of their produce, introduction of annual advance licence system, putting additional 894 items under the Open General Licence (OGL) list and another 414 items being placed on the special import Licence List.

The policy package also aims at cutting transaction costs for exporters by allowing electronic filing of applications to be started on a pilot basis for issue of advance licences. For on the spot solution to the problems faced by exporters, the government would appoint an Ombudsman. "This is intended to avoid any scope for causing delay and possible harassment", the Minister said.

Mr Hegde proposed to take up with the Finance Minister the issue of revalidation of advance licences where export obligations were duly fulfilled but imports could not be made in time due to unforeseen circumstances.

Unlike last year where an export growth target of 20 per cent was set, the Commerce Minister, this year refrained from making any specific growth target. Exports recorded a meagre 0.41 per cent growth during the first 10 months of the year, which the Minister attributed to world-wide recession and massive devaluation of currencies by many countries in South East Asia.

"During the second half of 1998 practically all our neighbours, namely Pakistan, Thailand, Indonesia, Bangladesh, Sri Lanka and even China have experienced negative export performance," he said.

A scheme is being evolved to involve state governments in the export promotion effort particularly for encouraging agro-exports.The Commerce Minister would seek a plan allocation of Rs 500 crore by way of grants to the states for strengthening their export infrastructure.

The Duty Entitlement Pass Book (DEPB) scheme is being continued. Pre-Export DEPB credit entitlement is being increased five per cent to 10 per cent of the previous year’s export performance.

A number of ports have been added for availing facilities under the Duty Exemption Scheme, including DEPB and rationalisation of DEPB rates has been done to account for revisions in customs duty and surcharge thereon.

Duty free import of consumables upto certain limits has been allowed for gem and jewellery, handicrafts and leather sectors to enable the exporters to achieve higher unit value realisation.

Threshold limits of Export Promotion Capital Goods (EPCG) Zero-duty scheme for several sub-sectors under the chemicals, plastics and textiles sectors has been brought down from Rs 20 crore to Rs one crore.

No additional customs duty would be charged on import of capital goods under Zero-duty EPCG Scheme in marine and electronic sectors.

There has been further rationalisation of Export-Oriented Units (EOU)/Export Processing Zones (EPZs) scheme. Net Foreign Exchange Earnings (NFEP) as a percentage of exports for units operating in EPZ and EOUs has been made uniform at 20 per cent.

Procedures for operation of units in EOU/EPZ have been simplified further and a number of operations are to be permitted on the basis of self certification.

The concept of Free Trade Zones without customs intervention, export obligation etc has been proposed in the policy. Free Trade Zones (FTZs) will become operational from July 1, 1999 and they will be permitted to carry out any manufacturing or trading activities, the Minister said.

Sale in domestic tariff area (DTA) will be permitted for the FTZs on payment of full customs duty.The Development Commissioner will provide a single window service and customs will not interfere in any way, Mr Hegde said.

"My idea is to corporatise these EPZs as they are in other countries," Mr Hegde said.

Green cards will be issued to exporters who export 50 per cent of their production with a minimum of Rs one crore per year entitling them to various facilities in a move to "recognise the national service rendered by exporters".

Similarly, all exporters who attain export house/trading house/star trading house/ super star trading house/ for three successive terms or more, will be eligible for ‘Golden Status Certificate’ which entitle them all benefits accruing from such status in perpetuity.

In an attempt to encourage exports from the small scale sector, exports made by small scale sector manufacturer exporters will be given triple weightage for the purpose of recognition of export house/trading house/star trading house/ super trading house.

The modified policy has also shifted 414 items from the restricted list to special import licence (SIL) list, besides putting 894 items under open general licence (OGL). This would bring down the items on the restricted list to 667.

To promote export of branded products, a beginning has been made by providing benefit of special import licence to all such exports, he said.

Acknowledging the potential of the services sector, the Commerce Minister said that apart from extending all facilities applicable to merchandise exports, the threshold limit for recognition as service export house etc has been pegged at one-third of the level prescribed for merchandise exports.

Responding to the concerns of domestic industry against unfair competition from abroad, the policy restricted imports of all second hand goods and removed second hand capital goods from EPCG Scheme.

The Commerce Minister said he was seeking status of physical exports for project goods by domestic industry, particularly as domestic capital goods sector was clearly at a disadvantage vis-a-vis zero duty import entitlement for certain projects.

To enable development of new products and exploration of new markets, the admissible limit for import and export of samples has been relaxed considerably.