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EXIM POLICY 2003-2004
[Full Text of the speech delivered by Hon’ble Commerce & Industry
Minister on the 31st March 2003]
PAGE 3
INCENTIVE FOR FAST GROWING STATUS HOLDERS
19. The status holders have been a pillar of strength in increasing exports. There is a feeling among them that under the Exim Policy, substantive benefits are no longer available to them since the earlier benefits such as fast track clearance and relaxation from certain procedures, are now universally applicable in the liberalized environment. We recognize that the status holders will continue to play a significant and increasing role in boosting exports, particularly from the small scale sector, as most of the small scale units will not be in a position to directly access the international markets. Moreover, it will be our endeavor to facilitate India emerging as a major base for outsourcing products and services for the rest of the world. They are also critical to our strategy for accelerating the rate of incremental growth of exports. Therefore, we intend to give a premium to the status holders who achieve high growth rate in their exports. It is proposed to give a duty free entitlement to them for import of capital gods, spares, office equipments and consumables. This will be available to status holders who achieve a growth rate of 25% or more in the current year with a minimum export performance of Rs. 25 crore. They would be entitled to a duty free entitlement of 10% of the incremental growth in exports during the current financial year. This entitlement would be subject to actual user condition which can be passed on to associate manufacturers.
DEVELOPMENT OF EXPORT CLUSTERS
Coming to the specific initiatives, the 2002-07 Policy had recognized three major industrial clusters at Tirupur, Panipat and Ludhiana as Towns of Export Excellence with a view to maximizing their export profile. It is also recognized that pro-active steps need to be taken to enhance the productivity, quality, cost effectiveness of Indian Industry by bridging the gap in critical physical infrastructures by providing back up support of common facilities such as design centres, training for essential skills in the workforce, testing facilities to upgrade quality and market linkages etc. This will increase the overall competitiveness of the selected industrial locations which are predominantly export oriented. The Department of Industrial Policy & Promotion (DIPP) as a nodal department has formulated Industrial Infrastructure Upgradation Scheme which is in final stage of approval. This scheme envisages upgradation of infrastructure in existing clusters/ industrial locations that have developed on account of local skills, market and resources. Efforts under the scheme will be supplemented by the ASIDE Scheme of this Ministry and similar schemes being implemented by other departments. To start with ten clusters/ locations with high growth potential would be supported to bridge technology and productivity gaps. Areas of intervention in the selected clusters / locations would include, inter-alia Technology & Skill Upgradation, Physical infrastructure, environmental mitigation facilities etc. The user industry would identify the needs and implementation would be based on a participatory approach.
EXTENSION OF EO FOR REHABILITATION OF SICK UNITS
21. Like other developing countries, India is a capital scarce country. We can not afford the luxury of dragging on indefinitely the process of either rehabilitation or winding- up of a sick unit. We have to ensure that a sick unit is quickly rehabilitated in case it is possible to do so. To facilitate this, we already have a provision for extension of the period of fulfillment export obligation in case a sick unit is taken over. However, there is no such provision for the existing management bringing a unit back to health on the basis of an approved rehabilitation programme. To remove this lacunae, we propose to allow extension of the period of export obligation of sick units on the basis of the draft rehabilitation schemes prepared by operating agencies appointed by BIFR. Similar facility would be available for units outside the scope of BIFR and under the scheme of rehabilitation of the concerned states.
OUR APPROACH
22. In keeping with our policy to do away with unnecessary restrictions which increase transaction costs, there will be further simplification of procedures in order to reduce these costs to a minimum. A study carried out by Exim Bank in October 2002 indicates a significant reduction in the transaction cost in all the sectors covered from levels prevailing as per an earlier survey in 1998. I have no doubt that simplifications and liberalization in earlier Exim Policies contributed substantially to this reduction. However, the fact remains that transaction cost levels in India still remain at unacceptably high levels. This seriously detracts from the competitiveness of our exports. Recognizing this, we have taken on board the specific suggestions received from the exporters in the Open Houses to effect further simplification. As part of these efforts, we are now giving high priority to the implementation of the EDI programme covering all the major community partners in the export process in order to minimize transaction time and to reduce discretion. We are now aiming at providing on-line approvals. This can be possible only with the full implementation of the EDI programme by all the community partners as per the agreed schedule. We shall try to ensure that this takes place.
CODIFICATION OF SEZ/EOU RULES
23. In recognition of the importance of SEZ Scheme to our strategy for accelerated export growth and the contribution of 100% EOUs, to the export performance of the country, we are taking a major step in the simplification and codification of rules, regulations and procedures applicable to SEZ and EOU units. All these rules and regulations are being put in one place. This should greatly facilitate both potential investors as well as existing units in these sectors.
ANNUAL ADVANCE LICENSE FOR STATUS HOLDERS
24. There are certain procedural simplification and flexibility which are being introduced in the new Policy. As part of our efforts at reduction of transaction cost, we are introducing annual advance licence facility for status holders so that they can plan for their imports of raw material and components on an annual basis and take advantage of bulk purchases. Similarly, we are introducing diamond dollar account for the convenience of gem and jewellery exporters.
25. Along with the promotion of agro and service exports, which I have already covered, we intend to give special focus to certain sectors of merchandise export which hold the potential for accelerated growth. These sectors are textiles, particularly garments, auto components, gems and jewellery, drugs and pharmaceuticals and chemicals. We will work closely with the concerned administrative ministries and the industry not only to remove any possible hurdles in the way of accelerated growth of exports but also undertake measures for vigorous trade promotion to boost export of these items.
26. You may recollect that my esteemed predecessor in his address on the occasion of announcement of Exim Policy 2002-2007, had mentioned "Focus: Latin American countries" and "Focus: Africa" Initiatives for the diversification of markets for Indian goods and services. I am happy to say that these initiatives have led to creation of awareness of the members of the non traditional market for the Indian goods amongst Indian exporters and consequently led to increase in Indian exports in these regions. The "Focus: Africa" programme was launched on 1st April, 2002 to cover countries in Sub-Saharan African Region covering the first phase of seven countries mainly Nigeria, South Africa, Mauritius, Kenya, Ethiopia, Tanzania and Ghana. India’s trade with Sub-Saharan Region was US$ 3.63 Billion in 1996-97 which grew to US$ 4.2 Billion in 2001-02 with a growth rate of 16%. In view of this, I am happy to announce that in addition to the seven countries included in "Focus: Africa", we are extending the Programme to the remaining 11 countries of the Region where India has diplomatic Missions. These are Angola, Botswana, Ivory-Coast, Zambia, Zimbabwe and six countries of North Africa namely Egypt, Sudan, Algeria, Libya, Morocco and Tunisia. The "Focus: Africa" Programme will now cover 24 countries of the African continent with effect from 1.4.2003.
My predecessor had announced that we propose to launch a "Focus CIS" Programme in view of our traditional ties with CIS countries. It took a little time in getting the programme sanctioned. I am happy to announce that we are launching "Focus: CIS" Programme with effect from 1st April, 2003.
26. I shall end here by stating that our Approach would be to relentlessly pursue the goal or making India a significant player in the world market by leveraging India’s undoubted strength viz. intelligence, innovation and entrepreneurship of every Indian. This will be our national objective. We in Ministry of Commerce and Industry shall play the lead role in co-ordinating with other Ministries of Government of India and the State Governments as well as the exporters to succeed in this national endeavour.
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