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March 31, 2000
Special economic zones to be set up, quantitative restrictions go
The Export and Import or Exim Policy 2000-01 announced today envisages establishment of special economic zones or SEZs in different parts of the country where export production could take place free from rules and regulations governing foreign trade.
These will be on the pattern of those existing in China and will be given full operational flexibility, the movement of goods to and from SEZs will be unrestricted, India's Commerce and Industry Minister Murasoli Maran said while releasing the Exim Policy here.
Land for the first two SEZs in Tamil Nadu and Gujarat have already been earmarked.
It is expected that the Foreign Direct Investment or FDI, which is getting diverted to other Asian countries, would now come to the Indian export sector, Maran said.
The units in these zones will be able to import capital goods and raw materials duty free and would be able to access these from domestic tariff area without payment of terminal excise duty.
The other highlights of the Exim Policy are removal of quantitative restrictions on 714 items, strengthening of the tariff commission, duty free replenishment certificate scheme for more than 5,000 products, and abolishing of special import licences from April 2001.
Deemed export benefits have been extended to core infrastructure sectors involving an investment of Rs 1 billion or more like coal, hydrocarbon and also for renovation of power plants. All ports will switch to electronic filing of license applications by June 30.
The policy also provides for personal carriage of gems and jewellery imports and exports of gems and jewellery by courier. Diamonds traders have been allowed more space in foreign exchange dealings.
Moreover, import of silk has been allowed under Special Import License or SIL.
Another feature of the Exim Policy is the provision of an initial outlay of Rs 2.50 billion for a scheme to involve states in the export efforts.
The Export Promotion Capital Goods or EPCG scheme has been extended to all sectors without any threshold limit at five per cent duty.
Even as quantitative restrictions have been removed on a large number of items, tariff protection and safeguards under anti-dumping and anti-subsidiary mechanism will continue to be available for the domestic industry.
The government plans to convert the existing export promotion zones or EPZs at Bombay, Kandla, Visakhapatnam and Cochin into SEZs.
Asked whether labour laws will be as those operating in China, Maran said the country had to follow its own rules and regulations. However, for exporting units same facilities as those available for utilities will be extended.
While only two states have been selected, the scheme is expected to generate competition among states resulting in additional SEZs, the minister said.
The minimum size of SEZ would be 400 to 500 hectares or more.
Asserting that the scrapping of quantitative restrictions would not hurt the Indian industry, the minister said most economists had viewed this as a quota regime that brings only rentals and hinders efficiency.
In the event of a surge in imports, Maran indicated that enough safeguards are available such as tariffs, additional and speical import duties. This works out to 44 per cent.
In case of unfair trade practices such as dumping and subsidisation of exports, there is enough protection to the domestic industry under the safeguard provisions of the World Trade Organisation, or WTO, itself.
The quantitative restrictions or QRs have been removed as per the WTO commitments, Maran said.
The SIL list will be abolished after April 1, 2001 and the grant of SIL stands discontinued from today. All relevant customs notifications are being issued today.
The deemed export benefits have been made uniform for all sectors and these have been extended supplies made to projects funded by United Nations agencies and also extended to the power sector even for modernisation and renovation of power plants.
The minister said that necessary amendments would be issued shortly relating to information technology and other service sectors with regard to customs bonding.
He announced the setting up of a small group to quickly go into various policy and procedural changes that are required to be introduced in the various departments of the government so as to step up the growth of hardware electronics.
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