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March 31, 2001
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Exim Policy dismantles QRs

Our Correspondent in New Delhi


A 'landmark' Export-Import Policy, unveiled on Saturday, dismantles all quantitative restrictions (QRs) on remaining 715 items with adequate safeguards to domestic industries, introduces a new market access initiatives, moots agri-economic zones and drastically simplifies procedures

Commerce Minister Murasoli MaranThe 2001-02 policy, last of the five-year 1997-2002 Exim Policy, announced by the Commerce and Industry Minister Murasoli Maran puts foreign direct investment (FDI) in all manufacturing sectors in Special Economic Zones under automatic route besides giving infrastructure status to SEZ developers to move on to Export led Growth as in China.

With the lifting of all QRs from April 1, Maran said a standing group would be set up to have early warning system for monitoring imports to protect domestic industries and check dumping.

Outlining a new agri-export policy, Maran said the Exim Policy would hereafter be applicable to agro-sector also.

While allowing import of second-hand cars with the phase-out of QRs, Maran put a ban on import of beyond three-years-old and left-hand drive cars. Such imports would be allowed only through the Bombay Port.

Under the policy, import of new automobiles too would be allowed subject to the condition that they are from the country of manufacture and confirm to the provisions of Motor Vehicles Act of 1988.

The annual advance licensing scheme has been strengthened. This includes increasing entitlement from 125 per cent to 200 per cent and extension of advanced licence facilities for deemed exports.

The validity of duty free replenishment certificate has been extended.

The policy 2001-2002 attempts to further simplify and streamline procedures.

The products on which the government lifted import restrictions include food, agricultural products, stationery, textiles, vehicles and electronic goods.

India's present five-year Exim Policy runs from April 1997 to March 2002. But it fine-tunes the policy every year keeping in view the global trade picture.

Allaying fears of flooding of imports as a result of removal of QRs on715 items, Maran said the government was creating a standing group for tracking, collating and analysing data on 300 sensitive items which were of importance to the public.

The group would consist of commerce secretary, revenue secretary, secretary and secretary animal husbandry department and ''every month a statement would be published in the media about the import status of items''.

Simultaneously, in a major export policy initiative, Maran announced a strategy for giving primacy to promotion of agricultural exports to enable India to position itself to take advantage of expected liberalisation of world agricultural trade.

He said the government would supplement the efforts of the states in facilitating agri-exports through agri economic zones by filling the gaps such as information on global prices, demand and quality standards which have prevented many predominantly agricultural regions from fully participating in international trade.

Exim Policy schemes like duty exemption scheme and Export Promotion Capital Goods (EPCG) scheme would be applicable to agro sector as well with effect from Saturday.

Annual advance licencing scheme strengthened

Strengthening the annual advance licencing scheme the minister said the entitlement would be increased from 125 per cent to 200 per cent, besides extension of this facility for deemed exports.

Allaying fears of domestic industry, Maran said removal of QRs did not mean throwing the gates wide open.

"As a sovereign nation we are obliged to ensure safety and security of our citizens and safeguard our bio-security concerns as long as we ensure national treatment," he said.

To ensure this, he said imports of items like wheat, rice maize, petrol, diesel, Aviation Turbine Fuel (ATF) and urea will be permitted only through the designated trade enterprise, which will be functioning on commercial principles in accordance with Article 27 of GATT.

Import of all primary products of plant and animal origin will be subject to import permit to be issued by ministry of agriculture after an import risk analysis based on sanitary and phyto-sanitary measures.

In addition, conditions have been prescribed for import of new and second hand cars for ensuring road safety, he said, adding that the import of foreign liquor, processed food products and tea wastes are being made subject to already existing domestic regulations concerning health and hygiene.

In spite of all these measures, he said, "We cannot be complacent and eternal vigilance is absolutely essential to guard against floodgates of imports."

As an early warning system, the monitoring of imports have been streamlined and statistics of all the 10,202 tariff lines are now available with a time lag of two to three months as against 10 to 12 months earlier, he said, adding that "we intend to narrow this gap still further and bring it down to one month over the next three months."

Standing Group to monitor imports

Maran said the Standing Group that was being set up to monitor imports would comprise commerce, revenue, SSI and animal husbandry and dairy secretaries, besides Director General of Foreign Trade.

This group would function as a "war-room" for tracking, collating and analysing data on 300 sensitive items which were of importance to public.

"Moreover, every month, we propose to publish a monthly statement in the media about import status of the 300 items," he said.

He also set at rest doubts regarding India's ability to follow its own agriculture policy and various domestic support programmes to the farmers.

"The WTO's agreement on agriculture does not in any way require us to reduce our existing subsidies for research, pest and disease control, marketing and promotion service and various infrastructural support services," he said.

It does not also in any way affect our existing PDS, he said adding that "India has also not taken any obligation for providing minimum market access opportunities to other trading partners."

"We are second to none in our realisation of the basic fact that if our agriculture goes wrong nothing in our economy and social fabric will go right. We will leave no stone unturned to safeguard the food security and rural employment of our people," he said.

As negotiations on agriculture at Geneva are a time-consuming process, Maran said: "We would continue the consulting process at home with the states."

For that a dedicated special cell had been constituted in the commerce ministry to liaise with the state governments on the subject to exchange information and views, he added.

Elaborating on measures to strengthen Annual Advance Licensing Scheme, he said this facility had been extended even in cases where there were no standard input-output norms from the present 100 per cent to 200 per cent of the FOB value of preceding year's exports.

DFRC validity extended

The Duty Free Replenishment Certificates' (DFRC) validity has been extended from 12 months to 18 months, besides dispensing with technical characteristics in the case of items included in a small negative list.

Claims of DFRC would be permitted against advance payments, besides allowing automatic calculation of CIF value without reference to international prices of individual imports, he added.

He also announced setting up of a Business-cum-Trade Facilitation Centre and Trade Portal in Pragati Maidan in order to build up a comprehensive information base and easy accessibility to relevant information for exporters and importers.

Agriculture policy to be evolved

To boost agriculture exports, Maran said very soon an appropriate agriculture policy would be evolved and Exim Policy schemes like duty exemption scheme and export promotion capital goods schemes would be made applicable to the agro sector effective from Saturday. Referring to the announcements made by him for introducing electronic filing and on-line processing of applications, Maran said 97.5 per cent of licenses all over the country were today being issued within the set time limits.

QRs lifted on meat, butter, cheese, oranges, cigarettes, whiskey, coffee, tea...

The list of 715 items on which QRs will be removed from April 1 include a whole of lot household goods such as boneless meat, butter, fresh cheese, eggs, fruits and vegetables like oranges, potatoes, cauliflowers, broccoli, grapes, coffee, tea, spices, rice, beer, sparkling wine, sherry wines, whiskey, cigarettes, distempers, glues, thermocol, toilet paper, greeting cards, fabrics, carpets, tapestries, garments, swimsuits, toys and clocks.

Then there are many automobiles which can imported meeting road safety requirements.

These include cars, second-hand cars of not over three years' life, auto-rickshaws, motorcycles and scooters.

However, the commerce minister clarified that there were about 600 items relating to defence and flora and fauna over which the import curbs would continue in compatibility with the WTO rules.

Assistance to states for exports

On assistance to states for exports, the minister said a beginning had been made and a provision of about Rs 1 billion had been allocated in the current budget for involving the state governments in the national export effort.

Touching upon some of the persistent demands of exporters including the issues of easing the cost of export credit, rephasing or backloading of Section 80 HHC income tax benefits, decongestion of ports and airports, Maran said he had taken up these with the finance minister and other appropriate authorities.

"The dialogue with the ministry of finance and the Reserve Bank of India is continuing. At this moment I can only say I am quite optimistic about the outcome," he said.

"The other demands pertained to removal of anomolies in customs and excise duty structure in electric hardware sector and the demand of the engineering sector for a residual drawback rate based on iron and steel content of the export products," he said.

On EPCG scheme, he said imports of jigs, fixtures, dies and moulds would be allowed for the full CIF value of licence instead of restricting to 20 per cent of CIF value of licence.

Maran also announced measures to boost India's merchandise exports which have been growing at a robust 20 per cent year-on year in recent months.

India had been maintaining import curbs or quantitative restrictions on imports of 1,429 items, citing balance of payments problems.

But after the United States complained about the restrictions, the Dispute Settlement Body of the World Trade Organisation (WTO) ordered India to end the curbs on all the items by April 1, 2001, saying the country's balance of payments situation had improved.

India had removed restrictions on imports of more than 700 products last year as well.

Additional inputs: Reuters, PTI, UNI

Exim Policy 2001-2002: Full coverage
Union Budget 2001-2002: Full coverage


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