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India lifts import curbs on raft of goods

NEW DELHI: India took another major step along the economic liberalisation road on Friday, removing quantitative restrictions on imports of 714 items as part of its commitment to World Trade Organisation (WTO) norms.

Announcing changes to Export-Import (Exim) policy for fiscal 2000/2001 (April-March), Commerce Minister Murasoli Maran said the move would not hurt India's long-protected industry. Rather, it was a chance for industry to sharpen its competitive edge.

India has five-year-long Exim policies the current one runs from April 1997 to March 2002 but the government fine-tunes the policy every year.

India currently has restrictions on imports of 1,429 products, all of which it must remove under commitments to the WTO by April 1, 2001. "I am confident that scrapping of QRs (quantitative restrictions) will not hurt Indian industry, and the doubts and apprehensions now exhibited in some quarters are exaggerated and not well-founded," Maran said in his Exim policy speech.

Maran said he expected the country's exports, in dollar terms, to grow by 20 percent in 2000/2001. Indian exports grew 11.32 percent to $30.22 billion in the April 1999-January 2000 period compared with the same period a year earlier.

Maran said a special imports licence list would be abolished by the start of fiscal 2001. Imports of bio-technology and pharmaceuticals laboratory equipment would be duty free but linked to their export value, with a limit of one percent of the free on board value.

SPECIAL ECONOMIC ZONES

Maran announced that two private-sector special economic zones (SEZs) would be created in the industrially thriving states of Gujarat and Tamil Nadu, and four existing economic processing zones converted into SEZs.

Firms in the SEZs will be treated as being outside the nation's customs territory.

The policy statement said all sectors would now be covered by the Export Promotion Capital Goods Scheme, under which capital goods may be imported for export production at concessional duty.

It also allowed the direct import of second-hand capital goods less than 10 years old. Such imports could now be made directly on surrender of the special import licence without obtaining an import licence, it said.

Other measures announced included the introduction of a diamond dollar account scheme for jewellery traders. Exporters could from now on retain their proceeds in dollars in this account, which could be used for the import of rough, cut and polished diamonds from other diamond dollar account holders.

Gems and jewellery account for more than 18 percent of India's exports.

Maran also said that silk could be imported under the special import licence scheme.

"PRESSURE ON DOMESTIC PRODUCERS"

Kamal Sen, director at Anand Rathi Securities in Bombay, said the removal of quantitative restrictions was a big step, but in line with expectations.

"Now, with the peak duty of 35 percent and removal of restrictions, most consumer goods can be imported this will put pressure on the domestic manufacturers," he said.

"The government has also eased the import rules for second hand capital goods of less than 10 years and allowing the import of these goods to continue will make matters difficult for the local industries." -Reuters