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April 13, 1998


Exim policy seeks export thrust, anti-dumping body set up

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Union Commerce Minister Ramakrishna Hegde today announced amendments to the exim policy with 340 items being shifted to open general licence and the export target being fixed at 20 per cent.

Announcing these measures at a press conference in New Delhi, Hegde said the ministry will set up private bonded warehouses to import, stock, and sell even negative list items to holders of advance licence.

He said he had inaugurated the Directorate General of Anti-Dumping and Allied Duties to take care of the unprincipled problem of dumping by multinationals in India. The directorate will recommend anti-dumpimg duties whenever dumped imports are causing harm to the domestic industry. The last four years had seen an increase in the number of complaints failed by the domestic industry.

He said the amendments effected today were aimed at improving the country's export competitiveness, and also imparting greater freedom and flexibility in the operations of the exporting community.

The commerce minister stated that he was convinced that there was urgent need for "drastic changes" in the cumbersome export procedures to minimise transaction cost and delays. Hegde said what was important was attitudinal change at all levels and a problem-solving approach.

"High export growth can be sustained only through greater productivity as well as additional investment to produce and generate exportable surplus. The highest priority needs to be given to measures for improving productivity of our industry and the quality of our products," he emphasised.

Highlighting the major improvements made in the exim policy, he said the Duty Entitlement Pass Book scheme, introduced last year to neutralise the basic customs duty, will now neutralise the incidence of the special customs duty of five per cent as well. The DEPB rates will accordingly be worked out afresh and announced on April 15.

Similarly, the rates of over 300 new export items have also been finalised and will be announced on Wednesday.

The proposed private bonded warehouse would ensure easy and timely availability of new materials to exporters at internationally competitive prices. They will also facilitate bulk purchases from India by large overseas buyers like department stores abroad.

Hegde said a one-time extension in export obligation period will be given in respect of quantity-based advance licences on payment of prescribed fees to all status holders on the basis of information furnished by them as part of the effort to move towards a trust-based system.

Licences permissible on production programme basis will henceforth carry flexibility allowing a change in the description of the export products.

Additional licences will be given without delay during the same year on completion of export obligation.

The threshold limits under the Export Promotion Capital Goods system has been reduced from present limit of Rs 200 million and Rs 50 million to Rs 10 million uniformly for agriculture and allied sector including food processing industry and for garments, electronics, sports goods, toys, leather, and gems and jewellery sectors. Hegde stated that this is in response to requests from the small-scale sector for lowering threshold limits.

He declared that a special package for software sector is being evolved so that India could emerge as a significant player in this sector. To encourage further growth in electronics sector, the threshold limit for zero duty EPCG scheme for software has been brought down from Rs 200 million to Rs 1 million. "This is the biggest concession I have given for the electronic sector," the commerce minister announced.

He said fiscal incentives such as tax exemption of export profits and infrastructural inadequacies was being addressed in consultation with other departments concerned.

Replying to a question, the commerce minister said he had already taken up the issue to exempt profits earned from exports from income tax with the finance minister and the revenue minister. "I am confident that they will sympathetically review this issue," he said.

Hegde said he would like to hold a dialogue with champions of exporting houses to improve export sales of top 50 corporates by identifying constraints and difficulties so that they could achieve a minimum export turnover of 20 per cent of their total sales.

He also disclosed that the government would soon evolve a stable policy on agricultural export and encourage efforts at market development and promotion "with an assurance of continuity in supplies."

The EPCG licences would henceforth carry automatic validity for any variation up to 10 per cent in the value, for which the licence has been issued, without the licence holder having to apply for endorsement of those variations.

Procedures have been simplified in certain other areas as well-clubbing of advance licences will now be allowed without insisting upon same value-addition if the export product carry more or less similar description and have the same input-norms.

Hegde said he has also reviewed the list of restricted items and has decided to shift some of them from restricted to special import licence list. EPCG licence holders hitherto had to compulsory fulfill their export obligation by exporting only the goods manufactured from the imported capital goods. Now they will be allowed to export other value-added products with an enhanced export obligation. Jigs, fixtures, moulds, and dies will hereafter be permitted to be imported as part of capital goods.

For agriculture and allied export oriented units/export processing zone units, the minimum value addition norms have been modified to positive net foreign exchange basis.

Under the revised procedure, pharmaceutical companies will now be allowed to export free samples as per international practice. For the garment sector, trimmings and embellishments will be permitted for import as part of personal baggage on payment on applicable duty. Under advance licence facility, entitlement for import of trimmings and embellishments will be enhanced from two to five per cent.

Replenishment licensing scheme based on value of gold will be extended to silver and platinum jewellery as well. Export of branded jewellery for display will be permitted.

Hegde said licensing functions are being decentralised "extensively." The power to grant extension of export obligation period and revalidation of advance licence will be fully decentralised. Licences such as those for negative list items or under EPCG scheme which are necessarily required to be sanctioned at headquarters will be issued by the port offices.

The commerce minister was optimistic about completing the computerisation of the Directorate General of Foreign Trade offices during the current year. This would also include the interlinking of major offices of DGFT with the customs so that electronic data interchange could take place. The exim policy and handbook of procedures are being placed on the Internet.

Replying to a spate of questions from journalists from the capital, Madras, Calcutta, and Bangalore, the latter three linked by satellite on TV for the first time, Hedge declared that the government will take up at an "appropriate forum" the United States complaint about misuse of child labour in India.

On the World Trade Organisations instructions for removing foreign trade restrictions, he said the process will be completed with in the time schedule.

He would soon call a meeting of all chief ministers to discuss constraints like local taxes, lack of infrastructure facilities, and non-cooperation from local departments with the exporters. This will help remove existing hurdles and help boost exports, he maintained.

He said the government is also trying to find a solution for rubber exports as the rubber industry is not progressing. There has been a back log of 10,000 tonnes at present, the minister pointed out.


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