Tuesday, Apr 01, 2003
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By Our Special Correspondent
Addressing a press conference here today, the President of the Federation, M. Rafeeque Ahmed, said the facility for duty-free import of consumables, office furniture and the like up to 10 per cent of the foreign exchange earnings of the previous three years was a timely initiative, taking into account India's potential in services, including medical services, tourism and hotels, and education services. The policy would help India's hospitality industry (hotels and tourism) as also medical services industry (hospitals) to tap their full potential for earning foreign exchange. Though not much has happened so far in setting up agri-export zones, the revision of norms for fixing the DEPB taking into account the cost of fertilizers, and seeds would encourage progress on this scheme. Grant of `export' status to sales from the domestic tariff area (DTA) to units in SEZs would confer more benefits to such suppliers such as DEPB, DFRC and Sec. 80 HHC as against reliefs available for `deemed exports' and encourage domestic industry to improve their quality standards to international standards. Exclusion of special additional duty (SAD) while reckoning duty for domestic sale by SEZ units would be an impetus for the SEZs, which had so far not made much progress except for conversion of existing EPZs (export promotion zones) into SEZs. Mr. Rafeeque Ahmed said the new policy had recognised the utility of the EPCG (export promotion capital goods) scheme by linking the export obligation to the duty saved rather than the value of the capital goods. However, the full intended impact of the provision might not materialise unless basic import duty alone was considered for the purpose and CVD (countervailing duty) and SAD were excluded. Flexibility in fulfilment of the export obligation by export of any other product manufactured by the exporter and coverage of capital goods up to ten years old `are very timely and appropriate'. The FIEO President, while welcoming the restoration of the annual advance licence facility for status holders and duty-free import of capital goods up to 10 per cent of their incremental export growth, felt that the base year for reckoning the export growth should be 2002-03 and not 2003-04. "Those status holders, who have contributed significantly to exports this year (2002-03) despite the tough conditions in the world market created by the impact of September 11, 2001, terrorist attacks and recessionary conditions in the U.S. should be recognised for their achievement. Hence the new import entitlement should be granted on the basis of growth above the performance in 2002-03 and not reckoned on the basis of performance in 2003-04. This is particularly relevant because of the Iraq war and the possible effects of a long-drawn-out war on export performance in the coming month," Mr. Rafeeque Ahmed said. He also felt that the minimum export performance of Rs. 25 crores prescribed for this purpose was too high, especially considering the need to encourage small exporters. This should be reduced to, say, Rs. 10 crores, he said, and noted that status holders were till now bereft of any tangible benefit except for provision of legal undertaking (LUT) in place of bank guarantee.
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