The new export-import (exim) policy announced today by the commerce and industry minister, Mr. Murasoli Maran, seems like a landmark policy with the dismantling of all quantitative restrictions and the introduction of market access initiatives. Further, the policy aims at giving a boost to the agricultural sector and agri-exports.

It also provides for the automatic approval of all foreign direct investment in the manufacturing sector in special economic zones.

QR and automobile imports

The minister has taken care to see that while dismantling the quantitative restrictions across the board, a standing group would be set up to have early warning system for monitoring imports to protect domestic industries and check dumping.

The automobile industry's bugbear, the import of used cars, has been treated well. While allowing for the import of used cars to be in line with the WTO agreements, the government has made the administrative procedures in this regard cumbersome enough to dampen the enthusiasm to import vehicles from abroad. Further, it has put a restriction of brining in only right-hand drive vehicles and those that are less than three years old.

The government will assist domestic industry with wide ranging market access initiatives in the areas of research and development, market research, specific market and product studies, warehousing and retain marketing infrastructure in select countries and direct market promotion activities through media advertising and buyer-seller meets.

Simplification of procedures

On simplification of procedures, Mr. Maran announced the introduction of automatic customs clearances to status and green card holders and reduction in percentage of physical verification and random drawing of shipping bills, besides bringing in greater transparency by issuance of receipts by customs for ensuring accountability besides expeditious verification of DEPB and DFRC.

Exporter interface with DGFT has been smoothened by reducing the number of committees from nine to four and streamlining the others.

The minister sought to allay fears of the domestic industry on the issue of removal of quantitative restrictions. While accepting that we cannot be complacent and should guard against the floodgate of imports, the policy has prescribed for import of new and second-hand cars for ensuring road safety, he said, adding import of foreign liquor, processed food products and tea wastes were being made subject to already existing domestic regulations concerning health and hygiene.

The minister also said that as an early warning system, the monitoring of imports have been streamlined and statistics of all the 10,202 tariff lines have been made available with a time lag of two to three months as against 10 to 12 months earlier. The ministry will, he assured, attempt to reduce this gap further and bring it down to one month over the next three months.

Special economic zones

Further, with a view enabling hassle-free manufacturing and trading activities for the purpose of exports, the government has announced the setting up of special economic zones. The units in these zones would not be subjected to any pre-determined value addition, export obligation or output/wastage norms. For all practical purposes these units will be treated as being outside the customs territory of the country. Sale in domestic tariff area by the units in these Zones would be permitted only on payment of full customs duty, the policy clarified.

Rationalising export promotion schemes

In its efforts to rationalise existing export promotion schemes, the government has focused on capital goods and duty exemption schemes where it is extending the Export Promotion Capital Goods Scheme uniformally to all the sectors and to all capital goods without any threshold limit on payment of 5 per cent duty.

It has also been extended to identified service sectors. No additional customs duty/countervailing duty will be required to be paid. In all cases, export obligation fulfillment period is being extended to eight years.

The Exim Policy said that licences like advance licence for physical exports, advance licence for domestic supply and advance licence for intermediate supply for exports will be subject to actual user condition and will be non-transferable.

Export of branded goods

In order to encourage the export of quality/branded goods, the government has granted a double weightage on Free On Board or NFE on exports made by units having ISO or equivalent status for granting status certification, according to the Exim Policy of 2000-01.

For this purpose, value caps under Duty Entitlement Passbook Scheme would not be applicable to the identified branded products. The capital goods imported under this scheme will now be allowed to be moved out for the purpose of excavation, the Policy said. It added that all EoUs/units in export processing zones having an investment of Rs 5 crore or above -- in plant and machinery -- will be required to maintain positive value addition only.

Agri reforms and agri exports

With over 70 per cent of our people based in rural areas, a large majority among economists feel that QR removal is an opportunity to force the pace of reforms in the agricultural and industrial sectors.

According to them the pressures of competition can bring changes to upgrade infrastructure, deliver rural credit, promote investment in post-harvest management, rationalise subsidies, revamp PDS and reform labour laws. Without such pressures and only higher protection, the inefficiencies in the system will only go up.

WTO agreements allow QR to be maintained on the grounds of safety, security, public health, and public morals. Even if QRs are removed, several defence mechanisms can be triggered like raising the duties to the very high bound levels or impose anti-dumping, install safeguards or slap countervailing measures.