DUTY-FREE
IMPORTS FOR FARM GOODS EXPORTERS
Exporters of agricultural products have good reason to cheer.
The foreign trade policy will allow to import capital goods
under zero customs duty - instead of the present 5% concessional
duty - under the Export Promotion Capital Goods (EPCG) scheme.
While the concessional
duty rate of 5% will remain in case of exporters from all
other sectors, exporters of farm goods will get the additional
incentive of total exemption from customs duty on capital
goods imported under the EPCG scheme, officials said.
Though the benefit
of zero duty will be restricted to the agricultural sector,
the policy will remove the bar on age of CGs imported under
the EPCG scheme for the benefit of all exporters. As of now,
an exporter cannot import a machine more than 10 years old
and then avail of the EPCG benefit.
These apart, the
policy will comprise a package for the farm sector, titled
'Visesh Krishi Upaj Yojana'. The main component of the package
will be a duty-free import entitlement certificate, which
will allow exporters of a host of farm products - flowers,
fruits, vegetables, minor forest produce and their value-added
products - to import anything under the OGL duty-free up to
5% of the FoB value of the exports.
Currently, India's
exports of agriculture and allied products (excluding tea
and coffee) are estimated at over $20.2bn per annum. This
includes export of fruits and vegetables worth over $1bn,
which grew at a robust rate of 65% in the first quarter of
'04-05. The aim will be to substantially raise exports of
agricultural products.
The policy will
also announce the setting up of a separate export promotion
council for the services sector, sources said. Export of services
- roughly $15bn - accounts for 25% of the country's total
exports, while the perceived potential is much larger. A scheme
of Free Trade Zones, meant to encourage the setting up of
warehousing facilities in India and abroad for major commodities,
is also on the cards.
The EPCG scheme
allows import of capital goods for pre-production, production
and post-production (including CKD/SKD thereof, as well as
computer software systems) at 5% customs duty, subject to
an export obligation equivalent to eight times that of the
duty saved on capital goods imported under the scheme. The
obligation is meant to be fulfilled over eight years, reckoned
from the date of issuance of the licence.
