Government Exim-Policy - Analysis
General Issues
For calculation of DEPB Credit Rates at present only the basic custom duty is taken into account. Now special Custom Duty shall also be taken into account for the purpose of calculation of DEPB Rates.
DEPB Credit Rates for over 300 items will be announced shortly. DEPB Rates for more than 1600 items have already been announced. With this DEPB Rates for all the items where the input output norms and value addition norms were existing would have been declared. DEPB Rates now announced will also be applicable for the exports already effected under DEPB.
Threshold limit for EPCG zero duty scheme for Electronics, Textiles, Leather, Gems & Jewellery, Sports goods and Food Processing sectors has been brought down from Rs. 20 Crore to Rs. 1 Crore. For Agricultural and Allied sectors, this limit under zero duty has been brought down from Rs. 5 Crore to Rs. 1 Crore.
Provision is being made to enable the setting up of Private Bonded Warehouses which would permit import and supply of even Negative List items for supply on payment of duty against specific licenses and without payment of duty against Advance Licence. This should help to ensure easy and timely availability of raw-materials to the exporters, specially to SSI Units who may find it difficult to import directly smaller quantities at internationally competitive price.
Private Bonded Warehouse for exports will also be permitted. This would help such exporters especially overseas buyers to procure the goods from the domestic market from different manufacturers duty free. This permission will help project exports and large overseas buyers including departmental stores.
A provision has been made to the effect that movement of export consignment will not be interrupted and no export consignment shall be withheld or delayed for any reason whatsoever. In case of any doubt Custom Authorities may ask for an undertaking that the exports is on sole responsibility of the exporter.
To help sectors like Electronics and Garments, etc. licence on production programme basis is being allowed with the flexibilities like change in description of export product so long as accounting is in terms of input output norms. After completion of export obligation against this licence, second licence on production programme basis in the same year can also be issued.
Licensing functions are being decentralized extensively. All licenses for negative list of imports / negative list of exports, advance licenses approved by ALC, EPCG Licences approved by EPCG Committee at Headquarter / COS will henceforth be issued by Regional Licensing Authority. Power to grant extension in export obligation period and revalidation of advance Licences has been fully decentralized.
Duty Exemption Scheme
Advance Licences with Actual User condition will be allowed based on Positive Value Addition only. Requirement of minimum Value Addition of 33% for this category of Advance Licence has been done away with.
Clubbing of Advance Licences is being simplified. Accordingly, request for clubbing for closure of Advance Licences shall be considered in cases of similar description of the export product and Input Output Norms. Same value addition shall not be insisted upon.
Advance Licences to Export House / Trading House / Star Trading House / Super Star Trading House will be issued automatically. Deficiency, if any, shall be required to be complied with after issuance of the licence.
Time limit for filing post-export DEPB claim is being raised from 90 days to 180 days. Limit of shipping bills per application for post-export DEPB is being raised from 10 to 25.
One time extension in export obligation period is being provided for regularization of pending Advance Licences. Accordingly, if the exports have been completed even beyond the stipulated period, but before 31.3.1998, such cases shall be regularized automatically on payment of prescribed extension charges. Similarly, one time extension in export obligation period upto 30.9.1998 has been provided in respect of Quantity Based Advance Licences on payment of extension charges provided at least 50% export has already been completed.
EPCG Licences
Under EPCG Licence, an exporter was required to fulfill his obligation by the export of goods manufactured from the capital goods imported under the licence only. In case an exporter undertakes further processing of goods so manufactured then the export of such value added products shall now be permitted but with an enhanced export obligation to the extent of 50%.
Jigs, Fixtures, Moulds and Dies will be permitted to be imported along with spares to the extent of 20% of CIF value of licence. This has been done because earlier Jigs, Fixtures, Moulds and Dies which were imported under various Schemes had to be exported back or could be retained only on payment of duty. Now these goods imported under EPCG can be retained by these exporters.
Fluctuation of 10% of CIF value is being permitted automatically with corresponding enhancement / reduction in export obligation. Accordingly, the exporter will not have to come to DGFT for seeking such enhancement or reduction in CIF value time and again.
EOU/EPZ
In the Agricultural and Allied Sector EOU / EPZ Units will be permitted on the basis of positive Net Foreign Exchange earning only. Accordingly, for this sector, the requirement of minimum Net Foreign Exchange earning of 20% is being done away with.
Depreciation limit is being enhanced from 70% to 90% over a period of 5 years in Electronic goods and over a period of 8 years in other goods. This will help Electronic Sector including Computer Hardware and Software Sector as new technology can be brought in on a faster pace.
Export House / Trading House / Star Trading House / Super Star Trading House
Threshold limit for Export House is being fixed at Rs. 12.50 Crores on an average fob value of the exports made during the preceding three licensing years. Limits of Trading House / Star Trading House / Super Star Trading House have also been fixed accordingly. Certificates based on this revised criteria will be valid for a period of 3 years. This will meet the demand of all the Export Promotion Organizations and individual exporter who had felt that the limit of Rs. 20 Crores prescribed in EXIM Policy, 1997-2002, was too high.
In order to encourage project exports, double weightage in terms of value will be given to project exports.
Additional SIL will be given based on incremental exports as given below:
25 – 50% over preceding year : 1%
50 – 75% over preceding year : 2%
75 – 100% over preceding year : 3%
Over 100% over preceding year : 5%
Gem & Jewellery :
Wastage norms which have been revised have been de-linked from value addition norms. Value addition norms have also been revised on the basis of input output analysis. This should give a fillip to jewellery exports through simplification of the procedures.
The successful Replenishment Licensing Scheme based on value for Gold will be extended to Silver and Platinum jewellery as well. This should provide further impetus to exports in this sector.
Export of branded jewellery / partly processed jewellery is being allowed so as to encourage the export of branded jewellery. Such exporters will now be able to export branded jewellery for display for a period of 180 days. Personal carriage of jewellery in baggage by foreign buyer will also be permitted.
Electronic Sector
- Threshold limit under ‘Zero’ Duty EPCG Scheme for Software is being brought down from Rs. 20 Crores to Rs. 10 Lakhs.
- SIL Entitlement for Electronic Sector to the Licence holder under the DEPB is being enhanced from 15% of Net Foreign Exchange earnings to 25% of Net Foreign Exchange earnings.
- For encouraging software exports, SIL is being allowed to ISO-9000 Quality Certification holders even for exports of ‘on-site consultancy services’. SIL benefit also has been extended to WHO-GMP, HACCP and ISO-14000 Certificate holders.
- Depreciation limit for EOU / EPZ Units for Electronic Sector is being enhanced from 70% to 90% over a period of 5 years.
Exports
Exports of all oilseeds such as HPS groundnut, sesame seeds, sunflower seeds, Mustard seeds etc., when exported for consumption purposes, are being made free without any quantitative/licensing requirements. Similarly, export of Vegetable oils such as coconut oil, cotton seed oil, corn oil, kardi oil, linseed oil, mustard oil, niger seed oil, palm oil, palm kernel oil, rape seed oil, rice bran oil, salad oil, sunflower oil, sesame seed oil, soyabean oil are being made free. Export of groundnut oil in consumer packs upto 5 Kgs. is also being made free. However, their export in bulk shall continue to be restricted.
The value limit for free gift is being raised to Rs. 25,000/- from existing limit of Rs. 15,000/-. Exporters of medicines / pharmaceutical formulation will now be able to export free samples / physician samples, nor for sale, upto a value of 1% of their exports of similar items in the previous licensing year as against the existing limit of US $ 2,000/-.
Computerization
The process of computerization of DGFT offices to improve their functioning would now be completed during 1998. The task now would be to ensure that this process is completed during 1998 itself. This would include not only computerization but also the inter-linking of major offices of DGFT with the Customs so that Electronic data inter-change could take place.
The EXIM Policy and the Handbook of Procedures is being placed on the Internet and henceforth all Public Notices issued by the DGFT would be on internet. To bring about transparency in decisions taken by various committees for issuance of Licences will be simultaneously displayed electronically.
Highlights
- 340 items shifted from restricted list to OGL.
- DEPB scheme to continue.
- DEPB rates for over 300 export items to be announced soon.
- 5% special customs duty under DEPB to be neutralized.
- Threshold limit of Rs. 20 crore under zero duty EPCG scheme reduced from Rs. 20 crore to Rs. 1 crore for garments, electronics, gems & jewellery, sports goods, leather, toys and agro and food processing sectors.
- EPCG zero duty threshold limit for software sector reduced to Rs. 10 lakh.
- Special import license allowed to ISO-9000 quality certification holders for export of "on-site" consultancy services.
- Private bonded warehouses being setup, to import, stock and sell even negative list items.
- Setting up of private bonded warehouses for SSI sector allowed.
- Licensing functions being decentralized.
- More time granted for filing post-export DEPB claims.
- Depreciation limit being enhanced for EOU/EPZ units in the electronics sector raised from 70% to 90%.
- Value addition norms for gems and jewellery revised.
- Value addition norms dispensed with for agriculture and allied sector EOUs and EPZs.
- Replenishment licensing scheme extended to silver and platinum.
- Exports of oilseeds and oil relaxed.
- Computerization of DGFT offices to be completed by year-end.
- Anti dumping directorate set up.
- Clubbing of advanced licenses allowed.
- Gold jewellery exporters allowed.
- Garment exports permitted to import trimmings and embellishments as part of personal baggage.
- Self-removal procedure for clearing of imported goods by EOUs and EPZs under discussion with finance ministry.
Future plans/proposals
- A stable agro export policy on anvil.
- An infrastructure ministry.
- Realignment of the exchange rate to offset the impact of the South-East Asian currency crisis.
- Consultations with top 500 corporate to help them increase exports to 20% of turnover.
- Rationalization of export tariff anomalies.
- Concessional credit to exporters.
- Recast of fiscal incentives on export profits.
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