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EXIM Policy 2000-2001
TEXT OF SPEECH (EXIM POLICY 2000-01)
[Text of the speech delivered by Hon’ble Commerce
Minister on the occasion of release of the Exim policy is an important
document for all associated with financial sector.]
I now come to some of the specific features of the Exim Policy, a note on which is being circulated separately. I will only touch upon some of the major changes which have been effected this year. a) Removal of Quantitative Restrictions: We have proposed to withdraw Quantitative Restrictions in respect of 714 items with effect from 1.4.2000. The list of such items has been put on the Ministry’s web-site. In this connection, I would like to point out that Quantitative Restrictions were being maintained ever since 1947 on balance of payments grounds under the GATT to which we were a signatory. We participated in the Uruguay Round negotiations and became a founder-member of WTO and subscribed to all the Agreements but we continued to maintain QRs on the same balance of payments grounds. However, with the improvement in the balance of payments position, certain members of the WTO had disputed our need or justification to continue Quantitative Restrictions for BOP reasons. India could negotiate with most of the trading partners, with the exception of USA, to arrive at a mutually agreeable solution for phasing out these Quantitative Restrictions. USA filed a dispute and the Dispute Settlement Panel constituted in November 1997 ruled against India. India filed an appeal before the Appellate Body of WTO against the findings of the Panel but the Appellate Body also upheld the findings of the Panel challenged by India. Consequently, we are now obliged to withdraw Quantitative Restrictions. An agreement was signed between India and USA for determining the reasonable period of time, under which the Quantitative Restrictions. on the remaining 1429 tariff lines were to be removed by 1.4.2001, of which 714 before 1.4.2000. The tariff line-wise import policy was first announced on 31.3.1996 and at that time itself 6161 tariff lines were made free. Since then 1905 tariff lines have been made free till now. In this connection, I would like to point out that the QRs in respect of these 1429 tariff lines were withdrawn preferentially for imports from SAARC countries w.e.f 1st August, 1998 itself. It is to be noted that tariff protection will continue to be available.
Further in the event of unfair trade practices like dumping or subsidisation of exports by other countries causing injury to the Indian industry, adequate protection under anti-dumping or anti-subsidy mechanisms or if there is a sudden surge in imports causing serious injury to the industry, protection under safeguard provisions will always be available. The industry can always approach either the Anti-dumping Directorate or the Safeguard Directorate for appropriate relief. b) I also realise that in the context of the withdrawal of QRs, we have to be more alert and an institutional mechanism will have to be evolved to study, analyse and recommend appropriate tariff structure to maintain balance between the interests of producers and users/consumers. The suggestion given is that may be the Tariff Commission could be strengthened to play the role of an independent expert body to advise on these matters. While we have been able to strengthen the Anti-dumping Directorate to make it effective, perhaps adequate attention has not been paid to the strengthening of the Tariff Comm-ission to make it a useful and purposeful organisation. I am looking into this aspect also. I am confident that scrapping of QRs will not hurt Indian industry and the doubts and apprehensions now exhibited in some quarters are exaggerated and not well founded.
On the other hand, I would request the industry to consider this as an opportunity and initiate steps to increase their competitiveness. c) Rationalisation of Schemes: I. As part of simplification and rationalisation, the following schemes are being abolished: i) PREEXPORT DEPB SCHEME; ii) SPECIAL ADVANCE LICENCES FOR ELECTRONIC SECTOR CONTAINED IN APPENDIX 53 OF THE HAND BOOK OF PROCEDURES (VOL.II) These schemes are being abolished as unnecessary because very few exporters are using the same. iii) TRANSFERABLE ADVANCE LICENCES UNDER PARA 7.3 is also being abolished and replaced by a more efficient and simpler scheme. iv) SIL: It has to be abolished because there will be no SIL list after 31.3.2001. No SIL will be admissible in respect of exports/supplies made on or after 1.4.2000. In respect of exports/supplies effected upto 31.3.2000, SILs with a validity period upto 31.3.2001 will be issued immediately on request without waiting for the realisation of export proceeds. II. Inputs/Raw Materials for exports: for neutralising duties on inputs for the export products the following schemes will be available henceforth: i. Actual user non-transferable advance licence for physical exports, deemed exports and for intermediate supplies. This advance licence except the one for deemed exports will be exempt from payment of all kinds of duties like basic customs duty, countervailing duty, special additional duty, antidumping duty and safeguard duty. The advance licence, if taken for deemed exports shall be exempt only from basic customs duty. ii. For those who do not wish to go through the advance licensing route, post export duty free replenishment certificate will be available. Under this scheme after the completion of exports the exporters will be able to obtain transferable duty free replenishment certificates for importing inputs used in the export products as per standard input-output norms. This scheme will be available for all the 5000 plus products listed in the Handbook of Procedures (vol.II) with a uniform value addition of 33%. III. Every year there is speculation –– and I hope no betting –– as to whether 80 HHC and DEPB will continue or not.
The
Finance Minister has ended the speculation regarding 80 HHC. I wish to do
the same for DEPB. The post export DEPB will continue until 31.3.2002. In
other words by 2002, DEPB scheme will be subsumed into one Drawback
Scheme. Meanwhile, to cheer up the exporting community, we are removing
the threshold limit of Rs.20 crores for fixing new DEPB rates and
therefore making DEPB more accessible. However, for all the products where
the DEPB rate is 15% or more, value caps are being fixed and will be
prescribed. But the value caps will not apply to products being exported
under brand names approved by an inter-ministerial committee in the office
of the DGFT. Wherever such value caps exist there will be no system of
verifying present market value. IV. I am aware that it has not been
possible to achieve full simplification of duty neutralisation mechanisms
and procedures and that we are still continuing most of the old schemes.
The multiplicity of schemes, I find, is unavoidable because of the
structure of customs duties. If there were to be a single VAT, there could
be real simplification of procedure as reimbursement/rebate of duties will
be simple. Till such a single VAT scheme is introduced, we are forced to
continue the system of Advance Licence for actual users who need to import
specific items and/or where the incidence of customs and additio-nal
customs duty is very high. All other exporters will have to be reimbursed
the actual taxes and duties on the inputs. For this purpose, we have two
schemes at present viz. Duty Drawback and DEPB. As DEPB will be phased out
by 2002, we have been examining how to streamline the system to introduce
a common Drawback Scheme which ensures refund of all taxes and duties on
inputs at the time of shipment itself. Well before the abolition of DEPB
scheme, the Finance Ministry will be strengthening the Drawback system to
extend the facility to as many items as possible plus also introduce a
quick and efficient system of awarding brand drawback rate. Also a
provision for appeal to an inter-departmental committee aga-inst drawback
determination is being contemplated. V. Capital Goods:
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