These sectors will now be able to import new as well as second-hand capital goods at a c.i.f. value of Rs 1 crore with a heavy export obligation against the Rs 20 crore minimum stipulated earlier. The seven sectors are garments, electronics, gems and jewellery, sports goods, leather, toys and agro and food processing. To encourage further exports in the high-potential software sector, the Rs 20 crore threshold limit under the duty-free EPCG scheme has been slashed to Rs 10 lakh.

Among the other modifications announced to the 1997-2002 exim policy are unrestricted imports of 326 items, mostly agricultural products, and the setting up of an agency to check dumping of government-subsidised foreign goods intothe country. The policy also promises to cut procedural bottlenecks for exporters.

"Export growth is a national priority and the package of measures announced today reflects the process of internal liberalisation to achieve this objective," Hegde told reporters. He said the target for 1998-99 was 20 per cent export growth in dollar terms. The depreciation limit for export-oriented units/export processing zones in the electronics sector is being enhanced from 70 to 90 per cent over a period of five years.

Hegde also announced that 326 items had been shifted from the restricted to the free list in keeping with India's WTO commitments on phasing out quantitative restrictions on imports.

Modifications in the one-year-old duty entitlement passbook (DEPB) scheme and substantial "rationalisation" of what he called "unwanted" and "cumbersome" procedures are the other major changes in the exim policy.

Moving towards what he called a "trust-based" system to achieve accelerated export growth, Hegde has alsooffered fresh incentives to export-oriented units/export procesing zones in the agriculture and allied sectors by dispensing with the minimum value addition norms and judging their performance on a net foreign exchange (NFE) basis.

Noting the difficulties facing small-scale exporters, the government has given yet another facility by allowing them to set up private bonded warehouses to import, stock and sell even items on the "negative" list to advance licence holders.

Export houses -- trading, star trading and superstar trading--which contribute about 72 per cent of the country's total exports, have also received Hegde's benevolence. They will now qualify for issue of advance licences on the basis of information furnished by them.

Among other things, the changes seek to permit garment exporters to import trimmings and embellishments as part of personal baggage on payment of applicable duty and to grant duty-drawback to gold jewellery exporters.

Licensing functions are being decentralised extensively.Powers to grant extension of the export obligation period and revalidation of advance licences will be fully decentralised. Licences such as those for negative list items under the EPCG scheme, which are necessarily to be sanctioned at headquarters, will be issued by the port offices. Simplifying the procedures, the government is allowing clubbing of advance licences without insisting on the same value addition if the export products carry more or less a similar description and have the same input-output norms. Under the modified DEPB scheme, the incidence of 5 per cent special customs duty has been neutralised by revising the credit rates from April 15. The commerce minister sought to allay apprehensions about the continuance of the above scheme adding that it would continue.

Further, new credit rates for over 300 new export items had been finalised and would be notified by April 15. The EPCG scheme expects importers of machinery to compulsorily fulfil their export obligations by shipping goodsmanufactured from imported capital goods. They will now be allowed to export further value-added products also with an enhanced export obligation. Jigs, fixtures, moulds and dies will hereafter be permitted to be imported as part of capital goods. A self-removal procedure for clearing imported goods by EOUs has been taken up and a decision is expected shortly.

Hegde also promised to take up the issue of 100 per cent deduction under section 80 HHC of the Income Tax Act for the exporting community with the finance ministry.

SALIENT FEATURES

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 wouldhave 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 licences 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 buyersto 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 decentralised extensively. All licences for negative list of imports / negative list ofexports, advance licences 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 decentralised.

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 thelicence.

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 regularisation 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 regularised automatically n payment of prescribed extension charges. Similarly, one time extension in export obligation period up to 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 fulfil 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 valueadded products shall now be permitted but with an enhanced export obligation to the extent of 50% jigs, fixtures, Moulds and dyes will be permitted to be imported along with spares to the extent of 20% of c.i.f value of licence.

This has been done because earlier Jigs, Fixtures, Moulds and Dyes 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 c.i.f 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 c.i.f value time and again.

EOUs / EPZs

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/Star trading house

Threshold limit for export house is being fixed at Rs. 12.50 crore 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 Organisations and individual exporter who had felt that the limit of Rs. 20 crore 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 asgiven 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 & jewllery

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

a. Threshold limit under Zero Duty EPCG Schemefor Software is being brought down from Rs. 20 Crores to Rs. 10 Lakh.

b. 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.

c. For encouraging software exports, SIL is being allowed to ISO-9000 Quality Certification holder evn for exports of on-site consultancy services. SIL benefit also has been extended to WHO-GMP, HACCP and ISO-14000 Certificate holders.

d. 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, ricebran oil, salad oil, sunflower oil, sesame seed oil, soyabean oil are being made free. Export of groundnut oil in consumer packs up to 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 $ 2,000/-.Computerisation

The process of computerisation 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 computerisation 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 isbeing 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.