DOING BUSINESS WITH INDIA

EXPORT - IMPORT POLICY 1992-97

Opening Remarks of Mr.P.Chidambaram Minister of State for Commerce on the New Export - Import Policy Announced on 31.3.1992 .

Since our Government assumed office in June 1991, major changes have been made in trade policy. I am happy that the reforms in trade policy have been generally welcomed and the consensus built around the trade has become stronger.

There is general agreement that trade flourishes only in a regime of freedom.
The objectives of the trade policy go far beyond mere balancing of imports and exports or a favorable balance of trade. There is growing interdependence among technology, investment and production. Trade policy should, therefore, be the spearhead for better technology, greater investment and more efficient production.

The Budget presented by the Finance Minister reflects may trade policy reforms of the Government. The big news is partialconvertibility of the Rupee. In July 1991, I had first mentioned the hope that the rupee would become convertible on the trade account. I am happy that we have been able to introduce partial convertibility on the current account within eight months. The Budget has also reduced custom duties and has signalled further reduction in tariffs in the future.

While our goal of a self-reliant and dynamic economy remains the same, we have discarded some assumptions. We have also shed the mood of export pessimism. We believe that imports and exports, taken together, could account for as much as 20% of GDP and it is our aim to achieve this level of trade. The trade policy reforms announced so far have, therefore, been in direction of liberalisation and removal of licensing, quantitative restrictions and other
discretionary controls.

The Export and Import Policy is an integral part of trade policy. Since the direction of economic reforms is clear, the direction of the new Export and Import Policy is also clear - fewer restrictions, greater freedom to trade and less administrative controls. The new Export and Import Policy is a major step forward in the programme of liberalisation.     I am particularly happy that the new Policy is a slim document - 85 pages with only 16 chapters and two small appendices.The philosophy behind the Export and Import Policy is that trade will be free subject only to a Negative List of Imports and a Negative List of Exports. The Negative Lists will be administered, as far as possible, not through case-by-case licensing but by laying down general schemes. These schemes will be simple, transparent and easy of both administration & compliance.

Stability is another key element in the new policy. As far as possible, changes will be made only once in every quarter. The highlights of the new Export and Import Policy are contained in the attached sheets.

I wish to take this opportunity to refer to the Foreign Trade (Development and Regulation) Bill, 1992 which will be introduced in the Lok Sabha shortly.

The Bill replaces the Import and Export (Control) Act, 1947. The law relating to foreign trade will comprise the new Act, the Rules and Orders made thereunder and the new Export and Import Policy. Violation of the law will attract monetary penalties, confiscation of goods and/or suspension or cancellation of licence. In introducing the new Bill and making the new Policy, Government has acted on the principle of trust. We trust that trade, industry and business will respond positively to the policy initiatives taken by   Government. We trust that their behaviour will be rational and  responsible. Government looks forward to working closely with trade, industry and business in order to achieve the high and ambitious goals that we have set for ourselves.

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HIGHLIGHTS OF NEW EXPORT & IMPORT POLICY

GENERAL

1. Trade is free, subject only to a Negative List of Imports and a Negative List of Exports.

2. Stable policy for five years 1992-97. The aid is simplicity and transparency.

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IMPORTS

3. Negative List of Imports is the smallest ever. Consumer goods will continue to be under restraint.

4. Import of 3 items banned, 68 items restricted, 8 items canalised.

5. Special import facilities for Hotels & Tourism industry and for Sports bodies

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EXPORTS

6. Export of 46 items permitted with minimum regulation.

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LICENSING

8. Negative Lists to be administered, as far as possible, by general schemes.Case-by-case licensing will be minimised.

9. Actual User condition eliminated except in a few special cases.

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CAPITAL GOODS

10. Import of capital goods liberalised. No longer in Negative List of Imports.

11. Export promotion Capital goods allowed. In some sectors without licence, in others under
licence.

12. Export Promotion Capital Goods (EPCG)   scheme liberalised. Two windows opened for concessional duty imports:
Rate of Period for Concessional Export obligation fulfillment of Customs duty export obligation 25% CIF Value 3 times CIF Value 4 Years 15% CIF Value 4 times CIF Value 5 Years

13. EPCG scheme extended to components of capital goods, with
concessional customs duty of  15%.

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RAW MATERIALS

14. Imports liberalised. Barring few items, no longer in Negative List of Imports.

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15. Value-based Advance licence introduced .

16. Self-certification Advance Licence available for Export Houses, Trading Houses and Star
Trading Houses.

17. All licences under duty exemption schemes transferable.

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DIAMONDS, GEMS AND JEWELLERY

18. Existing schemes continued with little modification.EOUs/Units under EPZs.

19. EOU scheme & EPZscheme liberalised.

20. Schemes extended to agriculture, horticulture, acquaculture, poultry and animal husbandry.

21. Inter-unit transfers allowed.

22. Permission to install machinery on lease.

23. EOU/EPZ units may export through Export Houses, Trading Houses and Star Trading Houses.

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DEEMED EXPORTS

24. Definition of Deemed Exports streamlined. Supplies toEOU/EPZ units, supplies against
EPCG licences and supplies against Advance Licences will be deemed exports.

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EXPORT PROMOTION COUNCILS, EXPORT HOUSES, TRADING HOUSES AND   STAR TRADING HOUSES.

25. Crucial role of EPCs, Export Houses, Trading Houses and Star
Trading Houses recognised.

26. Importer-Exporter Code Number is basic requirement.

27.Registration-cum-Membership Certificate (RCMC) by EPCs is a basic requirement for benefits and concessions under new policy.

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SPECIAL IMPORT LICENCES

28. Three categories eligible for Special Import Licences. :
1) Deemed Exports
2) Export Houses, Trading Houses and Star Trading Houses
3) Manufacturers with ISO 9000 or BIS 140000 certification.

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QUALITY

29. National campaign for quality awareness to be launched.

30. Laboratories/Testing Houses to be upgraded and accredited.

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