Exim Policy 1997 – 2002

 The 5-year Export and Import policy for the period 1997-2002 aims at giving a major thrust to acceleration of India's exports through restructuring and revamping of various export promotion schemes and wide ranging measures for simplification and streamling of procedures with a view to making them more transparent and easy to administer.

The policy aims at consolidating the achievement made possible during the preceeding 5-year Exim Policy for 1992-97, while continuing the process of trade reforms and trade liberalisation with a view to achieving higher rate of export growth. The new Exim Policy focused on the need to allow exporters to concentrate on the manufacture and marketing of their products globally in an environment unhindered by discreationary controls and procedural bottlenecks. The policy aims at enabling the industry to enhance its competitiveness in the global markets and to achieve its full potential in the areas of its strength.

Its objectives are : Accelerating the country's transition to a globally oriented vibrant economy in order to derive maximum benefits from expanding global market opportunitie; Stimulating sustained economic growth by providing access to essential Raw Materials, Intermediates, Components, Consumables and Capital Goods, derived from augmenting production; Enhancing the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitiveness while generating new employment opportunities; Encouraging the attainment of internationally accepted standards of quality and providing consumers with good quality products at reasonable prices.

 Highlights of Exim Policy

Gems & Jewellery Scheme To promote export of gold jewellery, it is proposed to increase the number of nominated agencies permitted to stock gold. At present only HHEC, SBI, MMTC and STC are doing this. This improvement will make available adequate quantity of gold to exporters on replenishment basis or on outright purchase.

Moreover, the EOU/EPZ units are being permitted to sell 10% of their output in the DTA against SIL on payment of duty.

Duty Exemption Scheme Significant changes have been made to reduce the multiplicity of schemes, improve their attractiveness and to make them simple and easy to administer. The quantity based advance license has been continued.

It has restructured various export promotion schemes and has replaced Value Based Advance License and the Passbook Scheme by a new scheme called Duty Entitlement Passbook Scheme. Under this scheme, an exporter, on the basis of notified entitlement rates, will be granted duty credits which will allow them to import inputs duty free. He can make use of this to import any free importable item. The credit can be transferred to another person but the transfer will be valid within the same port.

Under the Advance Licensing Scheme, the procedure has been further simplified. The Export Obligation period of 12 months has now been extended to 18 months. Further extension for 6 months will be granted on payment of 1% of the value of unfulfilled exports. This will reduce considerable paper work and harassment to the exporter.

 Software Software units can undertake exports using a data communication link or in the form of physical exports through a courier service also. They will be permitted on-line data communication for DTA sales, use of the computer system for commercial training and import of goods on loan from clients for a specified period.

Agro Sector Import of equipment of Rs 5 crores and above under the Zero Duty EPCG Scheme will be permitted for this sector.

Double weightage will be given to agro exports in calculating the eligibility of Export Houses, Trading Houses, etc. An additional 1% Special Import License on the total value of exports will be given for export of fruits, vegetables, floriculture and horticulture products.

EOU/EPZ units will be permitted to sell 50% of their output in the DTA on payment of duty without insistence on value addition.

Special Incentives for Export of SSI product/Products from North Eastern States/New Markets
An additional Special Import Licence of 1% on total value of exports has been given to EH/TH, etc., where such exports of products from North Eastern States constitute 10% or more of the total exports made. Double weightage on such exports has been given for recognition as EH/TH/STH/SSTH. Additional SIL has also been given for exploration of new markets. SIL on export of SSI products has been increased from 1% to 2%.

In case of small scale exporters holding ISO 9000 series or IS/ISO 9000 series quality certification, the FOB value of export will now be Rs. 1 crores and above during the preceding three licensing years instead of the limit of Rs. 5 crore and Rs. 2 crore respectively prescribed for others.

Export /Trading /Star Trading /Super Star Trading Houses
Earlier eligibility criterion for recognition of Export House/Trading House/Star Trading House/Super Star Trading House based on the average annual export performance of the preceding 3 licensing years was Rs 10 crores, 50 crores, 250 crores and 750 crores respectively. Keeping in mind the export target growth to be reached by the turn of the century and the fact that such status holders contribute between 60-70% of the country's total exports this has now been revised to Rs 20 crores, 100 crores, 500 crores and 1500 crores respectively.

Incentives to improve Quality of Export Products The SIL entitlement of exporters holding IS/ISO 9000 series has been increased from 2% of FOB to 5% of FOB.

 FERA Regulations

 Foreign Exchange Regulation Act, (FERA), 1973 controls India’s foreign exchange control regime. Comprehensive amendments have been made to FERA, especially with respect to foreign investment, to add strength to the   liberalizations announced in the economic policies. FERA provisions that imposed restrictions on locally incorporated companies with foreign equity holding in excess of 40 per cent (known as "FERA companies") have been removed. Such companies are now permitted to operate in India without any special restrictions, effectively placing them on par with wholly Indian owned companies.

Foreign exchange controls have been substantially relaxed. Effective from August 20, 1994, India announced its movement to Article VII status in the IMF: the Indian Rupee is now fully convertible on the current account. For authorized foreign investors, the Indian Rupee is already convertible on the capital account. Full capital account convertibility is expected in the coming years.

Although the Indian foreign exchange market is not yet fully developed, a variety of instruments have been introduced in the recent past. The dollar rupee forward market is very active, and firms have access to cross-currency options.