This content is from: Local Insights

India

On March 31 the Indian Ministry of Commerce and Industry announced the 2003 to 2004 export-import (Exim) policy, which supplements the five-year plan for 2002 to 2007.

The policy is a promising package for the export of services, with a focus on high-growth sectors like textiles, cars, gems and jewellery, and continues to dismantle restrictions on the export of certain items.

A key feature of the new policy is a shift of focus from merchandise to services, including:

  • Services: Companies with minimum foreign exchange earnings of Rs 1 million ($21,000) would be allowed duty-free import of office equipment, professional equipment, spares, and so on, up to 10 % of their average foreign exchange earnings in the preceding three licensing years.
  • Information technology: Supplies of certain items from electronic hardware technology park (EHTP) units to domestic tariff areas (DTA) now qualify for "fulfilment of export obligation". The importing of hardware for testing and development purposes is now duty free and hardware for embedding up to $10,000 can be disposed of after testing. Units in export-oriented units (EOUs), EHTPs, software technology parks and software export zones (SEZs) will now be eligible for 100% depreciation over a three-year period on computers and computer peripherals.
  • Gems/jewellery: Exporters trading in diamonds and diamond-studded jewellery will be permitted a diamond and jewellery dollar account. Gem and jewellery units in SEZs and EOUs may now bring in precious metals against export earnings.
  • Agriculture: Companies with proven credentials will be encouraged to sponsor agro-export zones for boosting agricultural exports.
  • SEZ scheme: Sales from DTAs to SEZs will be treated as exports, entitling domestic suppliers to several benefits including drawback/duty entitlement pass-book (DEPB) scheme benefits, CST exemption and so on. The value of capital goods imported by SEZ units will now be amortized uniformly over 10 years.

EOUs are now required to fulfil the criteria of a "net positive foreign exchange earner". No additional requirements relating to export performance will be imposed. Furthermore, the export/import of all products via post/parcel/courier by EOUs will now be permitted.

Export promotion capital goods (EPCG) scheme: The import of capital goods for both pre- and post-production facilities is allowed. Capital goods up to 10 years old will also be allowed under the scheme. The DEPB scheme rates have been streamlined in accordance with the reduction in customs duty.

Issuance of importer-exporter code (IEC) numbers, linked to an income tax permanent account number is in progress. IEC holders will be required to provide online returns of imports/exports made annually.

  • Entertainment: Tax incentives to venture capital funds, which provide finance to this sector will be allowed.

India is to comply with all its obligations to the WTO including further liberalization of trade and dismantling of quantitative restrictions.

Instant access to all of our content. Membership Options | One Week Trial