NEW DELHI, MARCH 31: In a major liberalisation, the government today removed curbs on the imports of 894 items, said that all export-processing zones would become free trade zones from July 1, and moved to give service exports a major fillip.Announcing these moves as part of the amended Export-Import Policy for 1997-2002, Commerce Minister Ramakrishna Hegde also announced the establishment of an ombudsman in Mumbai for on-the-spot redressal of exporters' problems, as well as modifications to existing export promotion schemes to benefit exporters.However, the biggest surprise was the putting on open general license of over twice as many import items as India was required by its WTO commitments to do at this time.The decision has been made after observing that no alarming import surge occurred after removing import curbs on several hundred items a year ago.The 894 items put on open general license today include large numbers of consumer and agricultural items such as vegetables, fruits, fish, milk and milk products, natural honey, cheeses, cosmetics and several textiles items. These can now be freely imported after paying customs duty.Another 414 items have been opened for import under a special import license, and will eventually move to the open general license route.This leaves a mere 667 items whose imports are still restricted in quantity (quantitative restrictions or QRs) rather than through tariffs. All such QRs must be phased out by April 2003 according to India's WTO commitments.The government also today made a beginning in kicking off electronic commerce by allowing exporters to apply electronically for advance licenses.The amended policy has lowered the threshold for duty-free capital goods imports from Rs 20 crore to Rs 1 crore for textiles, chemicals and plastics.The policy will accord export house status to service exporters as it does to merchandise exporters. And it will do so at a third of the value that entitles merchandise exporters to this status.The Commerce Minister said that in view of the repeated revision of the export target in the past year, he was not setting an export target for next year. Export growth between April and January has been a mere 0.41 per cent.Hegde also ruled out the removal of export curbs on agricultural items, saying compulsions of food security prevented this.The minister said export-processing zones will be converted into free trade zones on July 1. These FTZs will be outside the customs territory of the country and will be free to manufacture and trade without obligations of value addition, input-output norms, etc.Hegde has been forced to announce this date because of disagreement with the Finance Minister. Yashwant Sinha is objecting to the revenue-loss implications. Hegde is reportedly hoping to bring Sinha around after the actual announcement has been made.Again under pressure from North Block, Hegde did not announce an amnesty scheme for defaulting exporters. Instead, the time allowed for export obligation fulfillment has been extended by two years under the Export promotion Capital Goods scheme and by 18 months for advance license holders.The reduced nine per cent interest for pre- and post-shipment credit for exporters has also not been retained and their rupee borrowings will henceforth be at 10 per cent.The thrust of the policy announced today is to help exports by making credit and duty-free import terms easier, and accepting self-certification by exporters for advance licenses.However, one feature of the policy that was described as ``retrograde'' by trade analysts was the decision to allow imports of second-hand capital goods imports for end users only through licenses. Analysts said this was a ham-handed attempt to help indigenous industry which would hurt small enterprises that depend entirely on imports of second hand machinery.
