DOING BUSINESS WITH INDIA
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PARTIALLY CONVERTIBLE RUPEE :
From 3rd March, 1992, the rupee has been made a partially convertible currency, with the
eventual goal of making it freely convertible within two to three years. Under the
recently introduced Liberalised Exchange Rate Management System (LERMS) :
* All export receipts are to be surrendered to Authorised dealers 40% at the official rate, and 60% at market values
* Exporters can retain 15% of total receipts in foreign currency accounts out of the 60% surrendered at market rates to meet requirements such as travel, advertising, etc.
* Hard currency continues to remain available at for official rate
for imports under advance licences, imprest licences and replenishment of raw materials
for gems and jewellery exports, and for specified essential items.
* Foreign exchange will be available at market rates for all other imports.
* Foreign exchange requirements for private travel, debt servicing, dividend or royalty
payments and other remittances may also be obtained from banks or
exchange dealers at the current market rate.
* The system has the advantages of totally by-passing bureaucratic controls and
freeing importers from delays and inefficiencies.
EXPORT PROCESSING ZONES & EXPORT ORIENTED UNITS:
Export Processing Zones are designated areas within which
manufacturing or processing for the purpose of export is carried out. They are designed to
provide internationally competitive infrastructural facilities along with the
advantages of a duty-free, low-cost business environment.
India currently offers 6 such zones: Cochin (Kerala), Falta (West Bengal), Kandla
(Gujarat), Madras (Tamil Nadu), Noida (Uttar Pradesh) and Bombay (Maharashtra).
Export Oriented Units need not be located in an EPZ, but must be concerned with manufacture primarily for export purposes, and should adhere to specified value-addition norms.
The units can sell their product to Domestic Tariff Areas, to the
extend of 25% of the export sales, provided that the unit uses indigenous
raw material to the extent of 30% or more for the production .If the use of indigenous raw material is less than 30% DTA sales are correspondingly limited to 15% of export sales
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