April 1, 2001,
India at last lays quota regime to rest
New Delhi, March 31
The process of dismantling quantitative restrictions (QRs), limits set to curb imports in the form of quotas, licensing requirements or in the form of canalising imports, which began in the early nineties was completed today with the QRs for the remaining 715 items in the Exim Policy being lifted. The QRs now exist only for 600 Defence items.
This in effect means that from today importers can import anything ranging from meat, dairy spreads, clothes, cars, clocks, toys and even pins.
With a developing automobile manufacturing base in the country, the government has put some restrictions on the imports of cars. Second-hand cars more than three years old cannot be imported nor can Left-hand driven vehicles as they pose a security hazard on the roads.
Under the policy, new automobiles can be imported only from the country of manufacture. Imported automobiles should have a minimum residual life of five years and the importer should ensure supply of spares and service during this period. Also, such imports would be allowed only through the Mumbai port.
The free imports will introduce a paradox in the economy. While goods reserved for the small-scale industries cannot be manufactured in the country, they can be freely imported.
The Union Minister for Commerce and Industry, Mr Murasoli Maran, while announcing the Exim Policy for 2001-2002, the last of the five-year policy (1997-2002), described the removal of the QRs as “removal of quota raj” and one that enables India to join the big league of nations. The only countries which are using QRs today are Bangladesh, Pakistan, Sri Lanka and Tunisia.
Saying that the removal of the QRs did not mean throwing the gates wide open, Mr Maran added that some measures had been taken to safeguard the interests of the nation.
The measures include: Import of items like wheat, rice, maize, petrol, diesel, aviation turbine fuel and urea will be permitted only through the designated state trading enterprises; import of all primary products of plant and animal origin will be subject to import permits after an import risk analysis based on sanitary and phyto-sanitary measures; and import of foreign liquor, processed food products and tea wastes are being made subject to already existing domestic regulations concerning health and hygiene.
A standing group consisting of the Commerce Secretary, the Revenue Secretary, and officials of related ministries is being constituted, which will function as a “war-room”. The group will track, collate and analyse data on 300 sensitive items which are of importance to the public. Moreover, every month a statement about import-status of the 300 items will be publicised in the media.
In a major strategy for giving primacy to the promotion of agricultural exports, Mr Maran announced the setting up of agri economic zones and extension of Exim Policy schemes like the Duty Exemption Scheme and the Export Promotion Capital Goods to the agro sector. An appropriate agricultural export policy would be evolved very soon, he added.
A market access initiative has been planned under which the government will assist the industry in research and development, market research, specific market and products studies, warehousing and retail marketing infrastructure in select countries and direct market promotion activity through media, advertising and buyer-seller meets.
Mr Maran said the immediate aim and challenge before the country was to accelerate the export growth so as to achieve at least 1 per cent share of global trade by 2004-2005. “The total world export is expected to be around $ 7.5 trillion in 2004 and for us to reach this 1 per cent, we need to export $ 75 billion from the currently exported level of $ 43 billion, which roughly works out to 18 per cent growth rate. This is achievable”, Mr Maran observed. India is expected to clock 18 per cent growth in exports this fiscal year too.
The minister also announced a series of changes in the policy to make procedures simple. These include strengthening of the Annual Advance Licensing Scheme through increase of the entitlement for the annual advance licence from 125 per cent to 200 per cent of the FOB value of the preceding year’s exports, extension of the validity of the duty free replenishment certificates from 12 to 18 months and permitting FDI under automatic route in special economic zones.
On the scheme for assistance to states for exports, Mr Maran said a provision of about Rs 100 crore had been allocated in the current Budget for involving the state governments in the national export effort.
Procedures had been simplified, interface of exporters with the Directorate-General of Foreign Trade had been cut down by reducing the number of committees from 9 to 4 and streamlining others. Simultaneously, the Department of Revenue would take similar steps on the Customs side, including automatic Customs clearances to status holders and green-card holders and reduction in percentage of physical verification and random drawing of shipping bills.
On some of the persistent demands of exporters, including the issues of easing the cost of export credit and decongestion of ports, Mr Maran said he had taken up all issues with the Finance Minister and “at this moment, I can only say that I am quite optimistic about the outcome”.
Mr Maran said the government was also formulating a medium term export policy from 2001-2007, which would aim at adopting new approaches to replace existing systems with other schemes.
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