The premium was ranging between 3 to 5 per cent immediately after the announcement of the revised export and import policy by commerce minister Ramakrishna Hegde on March 31.

Another reason why SIL does not provide any attraction to exporters is that they were not able to import gold and silver against SIL as before. These two precious metals had commanded a good premium in the market. This had enabled exporters to sell SIL and earn a good sum.

Under the revised policy, the SIL facility continues to be applicable to export, trading, star and super star trading houses like MMTC Ltd, hundred per cent export-oriented units and others holding ISO-9000 certification.

But it will be available against exports of "branded"products only, benefiting mostly multinationals. Moreover, an exporter will haveto surrender three times the value of SIL to the customs authorities.

The scheme was introduced in 1994 as an additional incentive to the above select categories of exporters. They could transfer these licences if they were not utilsing them in their production process and substantially benefit from the premium commanding in the domestic market on their sale.

The SIL list was first expanded when the exim policy was modified on March 31, 1994. It was based on the premise that the premium on SIL would go up and imports through the SIL route would be a test case. If it does not succeed, only then would the government consider opening up the consumer goods sector. It was felt that PSU giants like MMTC Ltd and the State Trading Corporation of India could acquire SIL, sell them in the domestic market and collect the premium they command in the market. The intention was that the premium amount collected could be utilised for the corpus of the Indian Brand Equity Fund.

According R K Dhawan, chairman of theFederation of Indian Export Organisatioins (FIEO), SIL should be substituted by the DEPB scheme by allowing a rabate of 0.5 per cent on customs duty under it.

Dhawan would also like the government to consider allowing imports of second-hand machinery against SIL. This is because imports of such machinery have been made restrictive under the 10 per cent export promotion capital goods (EPCG) scheme of the policy.