In a memorandum to the commerce ministry, Assocham has suggested that the Exim policy for 1999-2000 to be announced on April 1, could either give price preference of 25 per cent with no change in the existing deemed export status or offer a price preference of 15 per cent with the same effective import duty as is currently applicable on direct import of finished products by ONGC/OIL/GAIL.

However, care needs to be exercised while implementing these alternative scheme, in that, the existing bid evaluation criteria being followed by the public sector oil and gas companies should remain unaltered apart from the proposed provision of price preference.

In a statement issued here, Assocham president KP Singh pointed out thatimplementation of these suggestions would lead to improved capacity utilisation in domestic industry.Besides, it would signal the achievement of self sufficiency, particularly since there is a pall of uncertainty on account of economic sanctions. The move would also protect employment in industries manufacturing capital goods and supplying to such strategically important sectors as petroleum.

The chamber further pointed out the oil and gas sectors were only partially eligible for only deemed export benefits though other sectors could avail full benefits such as special interest licence, advance intermediate licence, deemed export drawback scheme, refund of terminal excise duty and special import licence at 16 per cent of the freight-on-board value.In the cases oil and gas sector, refund of terminal excise duty is restricted to amount that would have been payable as excise at 3 per cent and special import licence at 6 per cent of the FOB value.

The chamber further pointed out that since no duty freeimports are permissible, domestic manufacturers suffer a higher rate of duty incidence at 30 per cent plus 5 per cent plus SAD and CVD on their imported inputs as against 20 per cent plus 5 per cent plus SAD and CVD on direct imports of finished products.