The and subject to conditions laid down. Capital
The new policy is expected to provide a substantial boost to our export and to lay a path for self-sustained growth of the economy.
The main objectives of this policy are:
(1) To establish the framework for globalisation of India’s foreign trade;
(2) To promote the productivity, modernisation and competitiveness of Indian industry and thereby to enhance its export capabilities;
(3) To encourage the attainment of high and internationally accepted standards of quality and thereby enhance the image of India’s products abroad;
(4) To augment India’s exports by facilitating access to raw materials, intermediates, components, consumables and capital goods from the international market;
(5) To promote efficient and internationally competitive import substitution and self- reliance under a de-regulated framework for foreign trade;
(6) To eliminate or minimise quantities, licensing and other discretionary controls in the framework of India’s foreign trade;
(7) To foster the country’s research and development and technological capabilities; and
(8) To simplify and streamline the procedures governing exports and imports.
In terms of the new policy, all items other than those mentioned in the Negative List can be imported freely. Import of items appearing in the Negative List, other than those import of which is prohibited or canalised, can be made against a specific licence and subject to conditions laid down.
Capital goods, raw materials, intermediates, components, spare parts, accessories, consumables and other goods may be imported without any restriction except to the extent such imports are regulated by the Negative List of imports or any other provision of this policy.
Such items may be imported by any person whether he is an actual user or not. However, if such imports require a licence, the actual user alone may import such goods unless the actual user condition is specifically dispensed with by the licensing authority. Import of certain specified capital goods on re-export basis is allowed without a licence.
Import of gifts shall be permitted according to the Baggage Rules 1976. In any other case, a Customs Clearance Permit shall be required for import of gifts by such institutions and establishments as may be specified in this behalf. Such imports will, however, be subject to the Foreign Contribution (Regulation) Act, 1976.
The new export policy has been framed in view of the introduction of partial convertibility of the rupee. Due to the partial convertibility of the rupee, the exim scrip has been abolished.
The concept of deemed exports has been retained in the new policy with some minor modifications. The definition of deemed exports has been revised and benefits such as Duty Exemption Scheme, Duty Drawback Schemes, refund of terminal Excise Duty has been extended.
The deemed exports will also be eligible for grant of special import licenses for such value or bearing such proportion to the value of the deemed exports, for the import of such items included in the Negative List of imports, as may be specified under a scheme to be notified in this behalf.
The Export Promotion Capital Goods (EPCG) Scheme has been liberalised and two windows are now available for import of capital goods at concessional rates of customs duty at 25 per cent or 15 per cent with corresponding export obligations.
Both new and second hand capital goods may be imported under the scheme. Domestic manufacturers of capital goods, who may require importing components, may also avail the EPCG scheme at the concessional rate of customs duty at 15 per cent of the c.i.f. value.
The export promotion councils have performed a very vital role in the promotion of exports. Their role has been recognised in the new policy.
The Registration-cum- Membership Certificate issued by EPCs will continue to be an essential requirement for any importer/exporter to avail of the benefits or concessions or to apply for any licence under the new policy.
In the policy, a new chapter on “Quality” has been introduced for the first time. The government will introduce a scheme to recognise and suitably reward manufacturers who have acquired the ISO 9000 (series) or the BIS 14000 (series) or any other internationally recognised equivalent certification of quality. Such manufacturers will be eligible for grant of special import licences.
The basic objective of the Duty Exemption Scheme is to make available to the registered exporters the necessary inputs needed for export production at international price without payment of customs duty so as to make the exports competitive in the international market both quality-wise and value-wise.
In the new policy, major reforms have been brought about in the Duty Exemption Scheme in the interest of export promotion. Now in the modified scheme the scope has been enlarged by way of introduction of the value based advance licences in addition to the quantity based scheme already in existence.
The exporters are now at liberty to import relevant inputs except for the prohibited items appearing in the Negative List, either on value based or on quantity based norms specified for a number of products to meet the export obligation undertaken.
However, the special interest licences for supply of goods to certain specified projects in India shall be issued only on quantity based norms. The exporters have also been given the facility of transferability of advance licences only after fulfilment of export obligation.
A new scheme called “Self-declared Pass Book Scheme” has been introduced. Star trading houses/trading houses/exports as well as exporters of certain other products are eligible to participate in the scheme.
Under this scheme the eligible exporters may obtain a pass book and effect import on the basis of self-declaration with regard to item, quantity and c.i.f. value.
Similarly, they shall also be discharged from export obligation based on their export entries, self-declaration and self-certification with regard to name, description of goods exported and value addition achieved.
Export Processing Zones:
Export-oriented unit scheme and. export processing Zone scheme under the new policy have been liberalised. In the trade policy reforms, export-oriented units and units in the export processing zones have been given greater autonomy and flexibility.
The schemes have been extended to horticulture, agriculture, aquaculture or similar activities. Under the new policy, these units will be allowed to install not only own machinery but also machinery taken on lease.
They may import free of duty (a) capital goods, (b) raw materials, components, spare parts and consumables, (c) prototypes, office equipment and consumables for office equipment and (d) material handling equipments.
Export processing Zones (EZP) have emerged as an effective instrument to boost exports of manufactured products especially in developing countries.
The zones are intended to provide an internationally competitive duty-free environment for export production. India has six export processing zones at Kandla, Santacruz, Falta, NOIDA, Cochin and Madras.
A seventh export processing zone at Visakhapatnam is under implementation. While the Santacruz electronics export processing zone is meant for export of electronics and gem and jewellery products, the other zones are multiproduct zones meant to cater to all products.
The government also introduced cent per cent export oriented units schemes in December 1980. The scent per cent EOU scheme is complementary to EPZ scheme and offers incentives in common with the EPZ scheme, adopts the same production regime and offers a wide option in locations with reference to factors like sources of raw materials and ports of export, infrastructural facilities, availability of technological skills etc.
As on March 31, 1992, 203 Units had gone into production and exported goods worth Rs. 3,870 crore. The major incentives offered to export-oriented units and units in export processing zones include duty-free import of capital goods, raw materials, and consumables, tax holiday for the first five years, facility to convert their entire export earnings at market rates etc.
In the Union Budget 1993-94 full convertibility of the rupee has been announced which is expected to reduce our trade deficit.