Highlights of new Export Import Policy 2002-07, as announced on 
March 31, 2002

1. DUTY NEUTRALIZATION INSTRUMENTS

1. Advance Licence
   
   Duty Exemption Entitlement Certificate (DEEC) book to be abolished. 
   Redemption on the basis of Shipping bills and Bank Realization Certificates.
   
   Withdrawal of Advance Licence for Annual Requirement (AAL) scheme as problems were encountered in closure of AAL and the significance of scheme considerably reduced due to dispensation of DEEC. The exporters can avail Advance Licence for any value. 
   
   Mandatory spares to be allowed in the Advance Licence upto 10% of the CIF value.

2. Duty Free Replenishment Certificate (DFRC)
   
   Technical characteristics to be dispensed with for audit purpose.
   
   

3. Duty Entitlement Passbook (DEPB)
   
   Value cap exemption granted on 429 items to continue. However, there are no value caps in DEPB rates for leather and leather products.
   
   No Present Market Value (PMV) verification except on specific intelligence.
   
   Same DEPB rate for exports whether as CBUs or in CKD/SKD form 
   
   Reduction in rates only after due notice
   
   DEPB rates for composite items to have lowest rate applicable for such constituent.
   
   

4. Export Promotion Capital Goods (EPCG) 
   
   EPCG licences of Rs.100 crore or more to have 12 year export obligation (EO) period with 5 year moratorium period.
   
   Export obligation fulfillment period extended from 8 years to 12 years in respect of companies under the revival plan of BIFR.
   
   Supplies under Deemed Exports to be eligible for export obligation fulfillment along with deemed export benefit.
   
   Re-fixation of export obligation in respect of past cases of imports of second hand capital goods under EPCG Scheme.
   
   

2. DUTY FREE IMPORT OF INPUTS
   
   Duty free imports of trimmings and embellishments upto 3% of the FOB value hitherto confined to manufacturer-exporters of leather garments extended to manufacturer-exporters of all leather products.
   

3. STRATEGIC PACKAGE FOR STATUS HOLDERS
   
   The status holders shall be eligible for the following new/ special facilities:
   

   1. Licence/Certificate/Permissions and Customs clearances for both imports and exports on self-declaration basis. 
      

   2. Fixation of Input-Output norms on priority;
      

   3. Priority Finance for medium and long term capital requirement as per conditions notified by RBI;
      

   4. Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels;
      

   5. 100% retention of foreign exchange in Exchange Earners’ Foreign Currency (EEFC) account; 
      

   6. Enhancement in normal repatriation period from 180 days to 360 days

4. REDUCTION IN TRANSACTION TIME & COST
   
   With a view to reducing transaction cost, various procedural simplifications have been introduced. These include:
   
   DGFT

1. A new 8 digit commodity classification for imports is being adopted from March 31, 2002. This classification shall also be adopted by Customs and DGCI&S shortly.
   
   The common classification to be used by DGFT and Customs will eliminate the classification disputes and hence reduce transaction costs and time. Similarly, Ministry of Environment and Forests is in the process of finalization of guidelines to regulate the import of hazardous waste.

2. Further simplification of all schemes. 
   

3. Reduction of the maximum fee limit for electronic application under various schemes from Rs. 1.5 lakh to Rs. 1.00 lakh.
   

4. Same day licensing introduced in all regional offices.
   
   Customs

1. Adoption and harmonization of the 8 digit ITC(HS) code.

2. The percentage of physical examination of export cargo has already been reduced to less than 10 percent except for few sensitive destinations.

3. The application for fixation of brand rate of drawback shall be finalized within 15 days. 
   
   Banks:

1. Direct negotiation of export documents to be permitted. This will help the exporters to save bank charges.
   

2. 100% retention in EEFC accounts
   

3. The repatriation period for realisation of export proceeds extended from 180 days to 360 days. The facility is already available to units in SEZ and exporters exporting to Latin American countries.
   

4. These facilities are being made available to status holders only for the present.

5. SMALL SCALE INDUSTRY
   
   With a view to encouraging further development of centres of economic and export excellence such as Tirupur for hosiery, woollen blanket in Panipat, woollen knitwear in Ludhiana, following benefits shall be available to small scale sector:
   
   Common service providers in these areas shall be entitled for facility of EPCG scheme.
   
   
   The recognized associations of units in these areas will be able to access the funds under the Market Access Initiative scheme for creating focused technological services and marketing abroad. 
   
   Such areas will receive priority for assistance for identified critical infrastructure gaps from the scheme on Central Assistance to States
   Entitlement for Export House Status at Rs.5 Crore, instead of Rs.15 Crore for others

6. COTTAGE SECTOR AND HANDICRAFTS

• An amount of Rs.5 Crore under Market Access Initiative (MAI) Scheme has been earmarked for promoting cottage sector exports coming under the KVIC. 

• Under the Export Promotion Capital Goods (EPCG) scheme, these units will not be required to maintain average level of exports, while calculating the Export Obligation. 

• These units shall be entitled to the benefit of Export House status on achieving lower average export performance of Rs.5 crore as against Rs. 15 crore for others

7. DIVERSIFICATION OF MARKETS
   
   Setting up of "Business Centre" in Indian Missions abroad for visiting Indian exporters/businessmen.
   
   ITPO portal to host a permanent virtual exhibition of Indian export product.
   
   Focus LAC (Latin American Countries) was launched in November, 1997 in order to accelerate our trade with Latin American countries. This has been a great success. To consolidate the gains of this programme, Focus LAC is extended upto March, 2003. 

8. SPECIAL ECONOMIC ZONES (SEZS)
   
   Offshore Banking Units (OBUs) shall be permitted in SEZs. This should help some of our cities emerge as financial nerve centres of Asia.
   It has been decided to permit External Commercial Borrowings (ECBs) for a tenure of less than three years in SEZs. This will provide opportunities for accessing working capital loan for these units at internationally competitive rates.

9. EXPORT POLICY
   
   As far as the Export Policy is concerned, all types of leathers including raw hides & skins, semi processed leathers such as EI tanned hides & skins, wet blue chrome tanned leathers, crust leathers etc, continue to be allowed for export without any restriction.
   
   There is no change in the policy with regard to the exportability of different types of leathers. The export of finished leather, all kinds will continue to be allowed for export but subject to the definition of the finished leather notified by DGFT from time to time.
   
   However, the condition of registering the export contracts with the Council for Leather Exports in respect of export of raw hides & skins, semi-processed leathers such as EI tanned hides & skins, wet blue chrome tanned leathers, crust leathers etc, has been withdrawn in the new Exim Policy. Accordingly, Table B of the Schedule 2 of the ITC (HS) classification book has been amended. 
   
   In other words, the exporters of these types of leathers are not required to register their export contract with the Council for leather Exports w.e.f. April 1, 2002.

10. MISCELLANEOUS
    
    Import/Export of samples to be liberalised for encouraging product upgradation
    
    Penal interest rate for bonafide defaults to be brought down from 24% to 15%.
    
    No penalty for non-realisation of export proceeds in respect of cases covered by ECGC insurance package.
    
    No seizure of stock in trade so as to disrupt the manufacturing process affecting delivery schedule of exporters. 
     
    Foreign Inward Remittance Certificate (FIRC) to be accepted in lieu of Bank Realization Certificate for documents negotiated directly. Optional facility to convert from one scheme to another scheme. In case the exporter is denied the benefit under one scheme, he shall be entitled to claim benefit under some other scheme. 
     
    Newcomers to be entitled for licences without any verification against execution of Bank Guarantee
    
    Transport subsidy for exports to be given to units located in North East, Sikkim and Jammu & Kashmir so as to offset the disadvantage of being far from ports.

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