NEW DELHI, July 10: The Director-General of Foreign Trade (DGFT) SB Mohapatra has ruled out the possibility of lowering the threshold limit of Rs 20 crore and above under the zero-duty facility of the export promotion capital goods scheme (EPCG) for textiles, engineering and leather sectors.

Mohapatra said that the proposal was mooted during the meeting trade representatives had with prime minister Inder Kumar Gujral on June 26. Though the proposal did not curry favour with representatives of the finance ministry, Gujral wanted it to be be examined. "We have not initiated any moves in this regard and the textiles ministry can take up the issue directly with the finance ministry", Mohapatra said.

The threshold limit for zero duty imports had been reduced from Rs 20 crore to Rs 5 crore for agricultural and allied sectors in the wake of the announcement of the 1997-2002 export-import policy. Later, there were demands for extending the facility to other sectors including the small-scale industries (SSI) as well. Mohapatra said the SSI sector could be allowed to import capital goods at 10 per cent customs duty against the prescribed export obligation allowed under the EPCG scheme.

But the SSI sector had to go in for modernisation for which funds had to be generated, he said adding that this was matter to be decided by the industry ministry. The SSI sector falls within the latter's purview. The EPCG scheme started in 1991-92 has become very popular with the exporting community.The export obligation against imports at 10 per cent customs duty is four times the CIF value of capital goods imports. It has to be fulfilled in five years.

Under the zero duty facility, the obligation can be fulfilled on an fob or net foreign exchange (NFE) basis. In the case of the former, the obligation will be equal to six times the CIF value of imported capital goods to be achieved in eight years.

The NFE norms prescribe five times the CIF value of imported capital goods as the export obligation. It has to be fulfilled in eight years.In the case of agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisiculture and sericulture the export obligation will be equal to six times the CIF value of capital goods on an fob basis and five times the CIF value of such goods on NFE basis. In all these cases, capital goods imports will be subject to actual user condition till the export obligation is completed.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.