A recurring cost of credit rating?

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: We are confused about trading with Pakistan. We manufacture polished granite slabs tiles. Can we export them to Pakistan? We want to import Onex stone from Pakistan. Is that allowed? We hear that trade between India and Pakistan is mainly through unofficial channels. Could you please also tell us the best way to enter the Pakistani market?
—Sethuraman, Vijya Grantites (P) Ltd, Bangalore

According to the latest Import Policy Order, 2005, only 770 items can be imported into Pakistan from India. However, there is no such restriction from India’s side. India has already extended Most Favoured Nation (MFN) Status to Pakistan as to all WTO members. Any thing that could be imported into India from any other country, is allowed from Pakistan as well.

In your case, polished granite slabs and tiles can be exported from India to Pakistan (as per the list item Sl no 656, HSN 6802.2300, Import Policy Order, 2005). Another good news is that your item also figures under the Sapta (Saarc Preferential Trade Arrangement) list and would get 10% concession on import duty in Pakistan. You can freely import Onex stone from there.

Trade experts suggest that while the official trade between the countries is worth $200 million, the unofficial trade, including both smuggling and through third countries, is around $1.5-2 billion. It is estimated that if restrictions are lifted, the potential for annual bilateral trade is to the tune of $6-8 billion.

Because of hostile bilateral relations and restrictive visa policies of the two countries, not many businessmen venture into each other’s markets. There are not many platforms where buyers and sellers from the two countries can interact. However, Ficci, along with the Federation of Pakistan Chambers of Commerce, is organising a ‘Made in India’ exhibition from 10-16 November in Lahore this year. Such an exhibition has not been organised in either of the two countries before. You can have more details from http://www.ficci.com.

Newspaper reports inform us that Sidbi has started a credit rating agency for SSIs. Some private agencies offering credit rating services have also approached us. They claim that they will arrange subsidy from NSIC. What is the correct picture? According to you, which is the best agency in India for credit rating?
—PK Godalia through email

The Ministry of SSI had launched its ‘Performance and Credit Rating for SSIs’ scheme in April 2005. The scheme is being implemented through NSIC. The scheme reimburses 75% of the fees paid for obtaining the rating by the SSI units up to the maximum limit of Rs 40,000 per unit as a one-time assistance. The amount of assistance is based on turnover. Units with turnover up to Rs 50 lakh are eligible for assistance up to 75% of the fee charged by the rating agency subject to a ceiling of Rs 25,000; units with turnover above Rs 50 lakh and up to Rs 200 lakh will get up to 75%, subject to a ceiling of Rs 30,000; and units with turnover above Rs 200 lakh, will get up to 75% of the fee charged, subject to a ceiling of Rs 40,000.

Initially, the following six agencies were enlisted under the scheme: Dun & Bradstreet (D&B), Onicra, Icra, Care, Fitch and Crisil.

Recently, Sidbi, along with a few banks, has also launched dedicated credit rating agency called SME Rating Agency of India Ltd (SMERA). The agency will also be covered under the scheme operated by the SSI ministry/NSIC.

The choice of agency depends upon your needs and affordability. The rating is two pronged: on the financial strength and on the performance capability of the unit concerned. The purpose is to facilitate access to finance and access to new markets by creating trust among the business partners. You may choose an international agency if you want to operate in international markets both for imports or exports, or you may choose an agency preferred by your banker if your primary concern is access to finance. Also, do check the cost of periodic ratings after the first one. The financial assistance is one time only. The recurring cost of some agencies may be high.

We find there is no clarity on importability of air conditioners filled with HCFC 22 gas in the foreign trade policy. Customs officials at ports have been raising objections and asking import licences. Could you please clarify?
—Vivek Bhartia, Mumbai through email

The matter is now settled, as the DGFT has recently issued a notification (no.26 dt. 13.09.05) allowing clearance of such air conditioners. According to the circular, the DGFT is in consultation with the Ministry of Environment and Forests, in order to evolve Gatt-compatible regulation for import of air conditioners.

Until such time, the importability of air conditioners that have already landed and arrived but not cleared for home consumption, will be treated as free and clearances will accordingly be allowed by the customs office.