STATEMENT BY MINISTER

Important changes in Export and Import policy (1992-93)

[English]

THE MINISTER OF COMMERCE (SHRI PRANABMUKHERJEE): The Hon'ble Members are aware that the new Import and Export Policy was announced on 31 st March, 1992 for the five year period 199297, Subsequently, Foreign Trade(Development& Regulation) Ac,t 1992 was enacted with the approval of the Parliament in August, 1992 repealing the Imports and Exports (Control) Act, 1947 the ex-

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ported Import Policy was deemed to have been notified under the new legislation which seeks to give a positive orientation to our foreign trade.

I would like to inform the House of the important changes being made in the Export and Import Policy effective from 1st April, 1993.

These charges are being made with a view to further liberalising the Export and Import Policy and making it more supportive of our export efforts, The changes are also based on our interaction with trade and industry and the experience we have gained in implementing the Policy over the last one year We have given particular attention to the Simplification and Streamlining of the policy and procedures in making these charges.

In the revised policy, special attention is being paid to the growth of exports in the agriculture and allied sectors This is essen- tial if we want to step up investment in the agricultural sector.

raise the income generation capacity in the rural areas and have sustainable growth with equity in our exports. Government there fox attaches high priority to encourage the establishment of Export Oriented Units (EOU) in this sector. It has been decided that units engaged in agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry and sericulture, can avail of the benefits of duty free imports under the EOU/EPZ scheme even if they export 50% of their production; they can Sell the remaining 50% in the domestic Market as against the limit of 25% permitted for non- agricultural Sector The definition of "capital goods" under the Policy has also been widened to cover capital goods used in agriculture and allied activities so that units engaged in this sector can avail of the Export Permission Capital Goods Scheme for importing their equip- ment at a concessional rate of duty. Furthermore, certain inputs and materials required by the agricultural Sector, such as "Prawn, shrimp and poultry feed', "Edible Wax for waxing fresh fruits and vegetables" 'Grape Guard Paper, 'Dipping Oil teatment of graps". 'Wheat Gluten'.

Fish meal in pow-

513 Statement by Minister . Important changes in Export

dered form" and "Grand Parent Stock (Poultry)" are being removed from the Negative List of Imports so that they are freely importable.

Together with the incentives announced for the agricultural sector in the Budget of 1993-94, I hope that these charges will give an impetus to exports from agriculture and allied activities.

Trade in services is increasingly becoming an important segment of world trade. our country is endowed with an abundance of highly skilled human resources that give us an advantage in the services sector,.In order to tap the potential of this sector, a new Scheme, called the "Export Promotion Capital Goods Scheme for the Services Sector" has been introduced in the Policy. Under the Scheme, Capital Equipment at a concessional rate of duty of 15% may be imported'by those who render; professional Services Such as Archiects, Chartered Accountants, Consultants, Doctors, Economists, Engineers, journalists, Lawyers and Scientist The Scheme is also open to other Services such as Hotels and Restaurants, Travel Agents, Tour Operators and Diagnostic Centers. The export obligation to be achieved by them will be in the form of the foreign exchange earned by them, regardless of whether the services are rendered in India or abroad, This new scheme will meet a longstanding demand that the services sector should be treated on par with the manufacturing sector.

In the case of the existing Export promotion capital Goods (EPCG) Scheme applicable other sectors, the window of import of capital goods at the concessional rate of customs duty of 15% is only being kept open, and the other window of import at 25% duty is being deleted in view of the general lowering of customs duties in the Budget of 1993- 94 There is representation from the trade and industry that the advan- tage of the EPCG scheme has been eroded with the reduction in the normal customs duties on capital goods. In order to provide certain flexibility in the Scheme, in the case of capital intensive projects involving soPhisticated technology, we are working out

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alternatives and detailed guidelines in this behalf will be announced shortly Further, the requirements relating to the provision of bank guarantee by he importer have been liberalised and the procedures simplified in order importer to reduce the cost to the importer in furnishing bank guarantee

In the context of the need for our achieving a rapid growth in our exports, it is Somewhat anomalous that we have a long list of items included in the Negative List of Exports. We have carefully Scrutinised the Negative List and have found that here is Scope for a substantial pruning of the list .We have therefor removed a total of 144 items from the Negative List of Exports In respect of those items which have been excluded from the Negative List, but in respect of which have been excluded from the which it is necessary to attach certain terms nd conditions on the exports like the minimum export price and the like, a separate Public Notice is being issued specity- ing those terms and conditions, but no export licence will required for their exports.

Al present, the criterion for recognition of Export Houses/Trading Houses/Star Trading Houses is based on their Net Foreign Exchange earnings (NFE).The trade and Industry has pointed out certain difficulties in the computation of NFE . In order to simplify the matter, it has been decided that the criterion for recognition of Export Houses/ Trading Houses/Star Trading Houses will henceforth be based on heir"FOB value of physical exports". The quantum of FOB value of exports has been adjusted suitably. As a consequence, the scheme for Special Import Licences for these Houses as well as for the electronics sector will also be based on the FOB value of physical exports instead of the NFE.

Under the EOU/EPZ scheme, the export obligation to be achieved by the units is subject to the prescribed value addition .At present. the value of indigenous inputs purchased by and EOU/EPZ unit is also deducted. in the computation of value addition In order to encourage the use of indige-

515 Statement by Minister Important changes in Export

[Sh. Pranab Mukherjee]

nous inputs by such units, the formula of value addition has been revised so as to exclude the value of indigenous inputs from the computation of value addition. The new formula also provides a capital dispensation for apical intensive units.

Under the Duty Exemption Scheme, both the quantity based advance licences and the value based advance licences are bang continued. In order to expedite the grant of licences under the Scheme, standard input-output and value addition norms have now been published for over 2200 items . Efforts Would continue to be made during the course of the year to increase substantially,the number of items covered by standard input-output norms. In the light of the experience gained in the operation of the value based advance licensing scheme, it has been decided that both the quantity and FOB value of the exports specified in the licence shall have to be achieved by the licence holder in order to minimise the possibility of the misuse of such licences The mechanism for monitoring the achievement of the export obligation by duty free licence holders is also being strengthened.

An updated and revised edition of the Handbook of Procedures is also being published today. An effort has been to simplify the procedures and make them more transparent. I should make it clear that the Export and Import Policy announced on 31 st March, 1992 continues to remain valid for the period 1st April, 1992 to 31 st March, 1997. The changes now being incorporated in the Policy are intended to carry forward the process of liberalisation.

I would also like to inform the House about certain other measures being taken to help the export sector. Firstly,exporters who have completed their exports and have realised the export proceeds before the introduction of the full convertibility are in a disad- vantageous position in case they have not completed their imports under the duty free licences before 1st March, 1993. In order to Passport (Amend.) Bill 516

Amends. made by Rajya Sabha remove this disadvantage, it has been de- cided that they will be given a cash amount equivalent to 8% of their unutilised import licences. Secondly, in the case of those exporters who have completed their exports before 1st March, 1992 and who have not exchanged their REP/Eximscrips before the 27th February, 1993, they will be given a further opportunity to surrender the Eximscrips and to receive the premium of 20% on them. The details in respect of both these measures are being worked out in consultation with the Reserve Bank of India.

The commitment and involvement of the State Governments in our export efforts is crucial. A Centrally sponsored scheme for assisting the States in the establishment of' industrial parks, with high standards of infrastructural facilities, is being formulated and I hope that it will be announced soon.

In conclusion, let me say that four performance on the export front holds the key not only for the management of our ' balance of payments position, but also for our orderly economic development. We need to build a strong export culture in the country that pervades not only our trade and industry, but also the government departments,- institutions and infrastrctural agencies. The Export and Import Policy is an important instrumentality to enable us to realise our full potential on the export front.

Thank you.

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17.20 hrs

PASSPORT (AMENDMENT) BILL