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| HOME | BUSINESS | EXIM POLICY 2000 | MARAN'S SPEECH | |||
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March 31, 2000
BUDGET 2000 |
Commerce Minister Maran's Speech -- Part II
I now come to some of the specific features of the Exim Policy, a note on which is being circulated separately. I will only touch upon some of the major changes which have been effected this year. Removal of Quantitative Restrictions: We have proposed to withdraw Quantitative Restrictions in respect of 714 items with effect from 1.4.2000. The list of such items has been put on the Ministry's Web site.
In this connection, I would like to point out that Quantitative Restrictions were being maintained ever since 1947 on balance of payments grounds under the GATT to which we were a signatory. We participated in the Uruguay Round negotiations and became a founder-member of WTO and subscribed to all the Agreements but we continued to maintain QRs on the same balance of payments grounds. However, with the improvement in the balance of payments position, certain members of the WTO had disputed our need or justification to continue Quantitative Restrictions for BOP reasons. India could negotiate with most of the trading partners, with the exception of USA, to arrive at a mutually agreeable solution for phasing out these Quantitative Restrictions. The USA filed a dispute and the Dispute Settlement Panel constituted in November 1997 ruled against India. India filed an appeal before the Appellate Body of WTO against the findings of the Panel but the Appellate Body also upheld the findings of the Panel challenged by India. Consequently, we are now obliged to withdraw Quantitative Restrictions. An agreement was signed between India and USA for determining the reasonable period of time, under which the Quantitative Restrictions on the remaining 1429 tariff lines were to be removed by April 1, 2001, of which 714 before April 1, 2000. The tariff line-wise import policy was first announced on March 31,1996 and at that time itself 6161 tariff lines were made free. Since then 1905 tariff lines have been made free till now. In this connection, I would like to point out that the QRs in respect of these 1429 tariff lines were withdrawn preferentially for imports from SAARC countries with effect from August 1, 1998 itself. It is to be noted that tariff protection will continue to be available. Further in the event of unfair trade practices like dumping or subsidisation of exports by other countries causing injury to the Indian industry, adequate protection under anti-dumping or anti-subsidy mechanisms or if there is a sudden surge in imports causing serious injury to the industry, protection under safeguard provisions will always be available. The industry can always approach either the Anti-dumping Directorate or the Safeguard Directorate for appropriate relief. Tariff structure: I also realise that in the context of the withdrawal of QRs, we have to be more alert and an institutional mechanism will have to be evolved to study, analyse and recommend appropriate tariff structure to maintain balance between the interests of producers and users/consumers. The suggestion given is that may be the Tariff Commission could be strengthened to play the role of an independent expert body to advise on these matters. While we have been able to strengthen the Anti-dumping Directorate to make it effective, perhaps adequate attention has not been paid to the strengthening of the Tariff Commission to make it a useful and purposeful organisation. I am looking into this aspect also. I am confident that scrapping of QRs will not hurt Indian industry and the doubts and apprehensions now exhibited in some quarters are exaggerated and not well founded. On the other hand, I would request the industry to consider this as an opportunity and initiate steps to increase their competitiveness. Rationalisation of Schemes: As part of simplification and rationalisation, the following schemes are being abolished:
Inputs/Raw materials for exports: For neutralising duties on inputs for the export products the following schemes will be available henceforth:
Capital Goods: The Export promotion Capital Goods Scheme has been extended uniformly to all sectors and to all capital goods, without any threshold limits on payment of 5% customs duty. The 10% countervailing duty on imports under EPCG has been withdrawn. This will also benefit domestic suppliers to EPCG holders because they will be able to get raw materials for manufacture of these goods without payment of duty. The changes in the EPCG Scheme will particularly benefit the small Scale units because earlier they could import Capital goods under this Scheme only on payment of 10% duty. Rationalisation of procedures: Duty exemption licence facility on the basis of self-declaration has been extended to deemed exports and intermediate supplies. Thus all types of licences for import of capital goods and raw materials and inputs where there are no standard norms can now be obtained on the basis of self-declaration. Registration-cum-Membership Certificate shall now be required to be filed only once in 4 years instead of filing it with each application. Trading House Certificates can now be obtained from the regional offices of the DGFT, instead of applying to the headquarters office in Delhi. Second-hand capital goods, which are less than 10 years old, can now be imported directly on surrender of SIL without obtaining an import licence. Deemed export benefits: have been made uniform for all sectors. Definition of capital goods has been expanded to include all items / components / spares / accessories / tools etc. which go into the making of capital goods. These benefits have been extended for supplies to all UN organisations as also for the modernisation and renovation of power plants. Agro-chemicals, biotechnology and pharmaceuticals: We are recommending that these knowledge-intensive sectors be allowed to import laboratory equipment, chemicals and reagents upto 1% of the FOB value of exports duty free for research and development. For products conforming to the standard pharmacopoeia as per the declaration on the label, the reqirement of NOC from the Drug Controller has been dispensed with. Silk: Input -output norms have been rationalised to promote the export of silk and silk products. Pre-export inspection of silk products by the Central Silk Board has been discontinued. The import of silk has been allowed under SIL. Leather, handicrafts and garments: Duty free import of trimmings, embellishments and other items has been increased from 2% to 3% of FOB value of exports. Requirement of endorsement from Export Promotion Councils for export of non-quota textile items to quota countries and textile items to non-quota countries has been dispensed with. Granites & minerals: Export Oriented Units engaged in export of granite, marble and other mineral products have been allowed to move the capital goods outside their manufacturing premises for the purpose of excavation. EOU/EPZ units having an investment of Rs.5 crore and above in plant and machinery will be required to maintain only positive value addition. All EOU/EPZ units have been allowed to carry out job works for DTA units in all sectors. Earlier this facility was available only for agriculture, marine and garment sectors. Projects: Project exporters / construction companies / service providers with a domestic turnover of more than Rs.100 crores can apply for International Service House Status on signing an MOU with the DGFT undertaking to achieve export performance of Rs.15 crores per year over the next three years. This is being done to enable such companies with a proven track record to participate effectively in overseas construction projects. SIL: All items on the SIL list shall be freely importable on surrender of SILs equivalent to 5 times the cif value of the imported goods. Gem and Jewellery: In order to develop India as a major trading centre for diamonds the following steps have been taken:
I am of the view that custom clearance should be based on self-declaration and even random checking of such consignments should be rare and only when there is credible information of possible malpractice; and further such right should be exercised only by officers of certain rank. Meanwhile, I am happy to announce that Green Channel facility is being extended to all manufacturer exporters who are Green Card holders. I am sure that this facility will help speedy turnaround of all import and export cargo of Green Card holders. After I joined this Ministry, I have been receiving large number of representations seeking resolution of past issues. I see that most of the issues are pending for quite sometime and I find that no solution could be found so far. Finance Minister and myself have discussed the issues and have decided to examine the various alternative solutions so that once for all these old cases could be disposed of one way or the other. We hope to issue final orders in all these cases in 3 months' time. Let me also explain the steps we are taking in my Ministry in particular and the Government in general in the matter of internal automation and computerisation so as to improve efficiency and ensure transparency in exporters' interface with the government regulatory agencies. Though there has been some delay in the internal automation of various regulatory agencies, in perfecting the software and in establishing connectivity between the organisations, I am happy to declare that the Directorate General of Foreign Trade has been able to achieve commendable success in its efforts towards computerisation. I must compliment the officers and staff for their dedication in this direction. Already electronic filing of applications has been introduced in six major offices. I have directed that licences for the applications filed electronically shall, in the normal course, be delivered within 24 hours. I am even contemplating to reduce the application fee for electronically filed applications so as to encourage the exporters to do so. For all status and Green Card holders, the electronic filing of applications shall become mandatory with effect from 1.7.2000. This facility will be available for others also and they will be given the same efficient and quick service if they also follow electronic filing. I hope that during the course of this year electronic filing of applications would become the norm. The benefits to the exporters are well-known especiallythe transparency it will bring, the speed of disposal and the efficiency it will bring about in offices which should be of great benefit to all. The customs, ports, airports, banks, and CONCOR are also making all out efforts to computerise their operations and I hope that EDI will become operational in a few months time. The Cabinet Secretary is personally monitoring the implementation. I have been assured that in the next few months and positively before the end of the year EDI will be fully operational. Then it will be possible for the Drawback to be credited to exporter's Bank Account instantly, the logging of DEEC can be done electronically and it should be possible to issue export replenishment licence, etc. automatically. I am sure everyone will agree that at the dawn of the 21st century, we cannot continue with the communication modes of the 19th and 20th centuries. Last year all the facilities available to merchandise export were also extended to the entire service sector. As services exports are going to be important part of our export basket, special attention is being given to export of services. Hence, all service providers whether tourism, health services, or accountancy can avail all the applicable benefits under the Exim Policy like the information technology sector. In this connection, information technology and other service sectors have been representing that customs bonding should be done away with. I am happy to inform that the necessary amendments are proposed to be issued shortly for the information technology sector. I am also conscious that to make businessmen turn to exports we have to make export effort hassle free besides being profitable. I recall what Thiru A. Ramaswamy Mudaliar who chaired the Export Promotion Committee in 1961 said in his report "Mercantile community cannot be expected to be guided by altruistic or patriotic motives and will expect to receive for its efforts in the export market, a return which stands in reasonable relation with the profits on domestic sale." - These words are true even today. India, by not following vigorous policies, is undoubtedly ceding billions of dollars of FDI to its East Asian neighbours each year - flows that otherwise would have come to India. I learn that our cumbersome procedures, delays, changing incentives packages, anti-FDI bias in some quarters, etc are the explanations why foreign direct investment is not forthcoming into India for export purposes. The alternate locations are more attractive. I hope that with the Special Economic Zones, the procedural constraints and delays will be taken care of and FDI for exports will also be attractive. The Government machinery is being reoriented to the new task of encouraging, assisting and facilitating exports. The mind-set will have to be transformed from one of authority and powers to functions and responsibility. The DGFT organisation will be reoriented in the coming years to cease to be a licensing office and regulator and function as a facilitator. Government is committed to bringing about the necessary changes in all regulatory agencies to make India an important player in world trade. We as a nation have the most enterprising business community; we have the technical skills and rich history of trading. We have to only free the business from needless restrictions and enthuse them to channelise their energies towards exports. The Exim Policy is only a small but important beginning of the overall Government strategy to bring about a special focus on export for creation of employment and to achieve high economic growth. India is a unique place - there is a modern India which exports knowledge-intensive products; there is also the traditional India which continues to export some of the finest handicrafts. We can thus maximise our comparative advantage over the entire spectrum of goods and services. What is needed is change in our thinking and mind-set and action to pave way for a quantum jump. India's moment has come; let us not blow it now. Public Utility Services All manufacturing units exporting more than 50% of their turnover are being declared as public utility services under the Industrial Disputes Act. Exporters have been extended the facility of exporting jewellery by speed post. Exim Policy 2000-2001 on rediff.com Exim Policy 1999-2000 on rediff.com Web site of the Ministry of Commerce and Industry
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