Brief notes on the New Exam Policy during (1997-2002) of India

The main features of New Exam Policy of 1997-2002 are as under:

1. Restricted Items:

The Policy unveiled by Minister of State for Commerce. B.B, Ramaiah has shifted 542 items out of the restricted list to the Special License (SIL) and the Open General License (OGL) list.

About 150 items can now be imported against SIL and about 80 items have been moved from SIL to the free list. Seventy percent of the items shifted from the restricted list are consumer goods while the rest are other products.

2. Vabal/Qabal:

The New Exim Policy, 1997-2002 has made significant changes in the duty exemption scheme. The new policy has reduced the multiplicity of schemes provided in the erstwhile policy. The duty exemption scheme now consists of duty free license and duty entitlement pass-book scheme.

As suggested by trade and industry the controversial Value-Based Advance License (Vabal) has been done away with while the Quantity-Based Advance License (Qabal) has been retained. The passbook scheme has now been replaced by a Duty Entitlement Pass Book Scheme (DEPB). The scheme covers both manufacturer exporter as well as merchant exporter.

3. EOU/EPZs:

All export units and technology parts are expected to be net foreign exchange earners. Percentage of export will be calculated annually and cumulatively for a period of five years.

On another front, the bonding period for units under the export-oriented unit’s schemes has been fixed at five years; this period may be extended to 10 years in the case of products requiring significant capital investment and infrastructural support.

EOU/EPZ Units may, with the permission of concerned customs authority, supply or sell in the DTA, samples of goods for display/market promotion up to one percent of the value of previous year’s export or a maximum of Rs. 12 lakh in case of new units going to production.

4. EPCG:

The new EXIM policy has extended deemed exports status to the oil and gas sectors. Earlier, this facility was available only to the power sector. Deemed export drawback facility will also be available for supplies against PCG license. This step has been taken to promote domestic sources of inputs.

5. Gold for Export Promotion:

The Exam Policy also provides for an increase in the number of agencies permitted to stock gold for export promotion purposes. More firms would be allowed to enter the fray and the Reserve Bank will provide the necessary permission for the purpose.

Under the gem and jewellery replenishment scheme, third party exports have been allowed so that small exporters are able to sell their products in the international markets.

6. Guidelines to DGFT:

A number of measures under the new Exam Policy (1997-2002) point towards lesser interface between the office of the Director-General of Foreign Trade (DGFT) and the exporters & H importers.

Further, in case of exporter not able to complete exports even in the enhanced period, a new provision has been made. This will allow the extension of export obligation by regional licensing authority for six months on the payment of penalty at one percent of unfulfilled export obligation value.

The new Exam Policy also provides that tools, fixtures, moulds, tackles, computer hardware’s and instruments imported for the purpose of jobbing under DES now can be retained on payment of custom duty without the permission of advance licensing committee.

The policy has also enhanced the financial powers of regional licensing authority for issuance of licenses where input-output norms have already been fixed and for issue of Export Promotion of Capital Goods (EPCG) license has been enhanced so that the parties could get the facility at the nearest point.

7. Export of Gem and Jewelry:

Earlier, the exports had to be completed within 90 days in outright purchase basis or replenishment scheme, or within 60 days under loan scheme and this period could further be extended by 30 days.

The time period under all these categories has been enhanced by 30 days straight away but without any provision of further extension.

Also, counter assistance system in the headquarters and all the regional licensing offices will be further strengthened. Head of the office will be personally responsible for streamlining the counter assistance system in respect of every scheme under Exam Policy.

Finally, the need to submit a large number of documents with every application has been reviewed and the minimum number of documents has now been prescribed.

8. Export Target/Trade Deficit:

The trade deficit for 1996-97 is expected to be in the range of $ 5 billion, commerce secretary P.P. Prabhu told newsmen at the press conference held to release the Exam policy.

The exports for the 1996-97 financial years are expected to grow at around five to seven percent and may touch around $ 35 billion. Imports may touch around $ 40 billion.

The POL imports will be higher by about $ 2.5 billion this year compared to the previous year. No targets have been fixed for the next year. Commerce secretary said that the ministry was working to meet the Ninth Plan target of $ 75 billion to $ 100 billion of exports by 2002.

9. Farm Exports:

Farm exports have turned out to be a key focus area in the new Exam Policy even though the Government has not relaxed the export control on sensitive items like food grains as proposed by the Commerce Ministry. For the first, the capital goods under the EPGC scheme have been lowered to Rs. 5 crore for agriculture and allied sectors.