Jaitley May Not Spring Any Surprise

New Delhi, March 30: | Updated: Mar 31 2003, 05:30am hrs
No major structural changes are expected in the second year (2003-04) of the five-year export and import policy to be unveiled by commerce and industry minister Arun Jaitley on Monday. The forthcoming policy that aims at greater simplification of procedures in the existing schemes will result in reducing the transaction cost of exporters and improving the scale of incentives available to them.

A single customs notification for 100 per cent export-oriented units (EOUs) and the units in the special economic zones (SEZs) is also expected. Besides this, domestic supplies for 100 per cent EOUs will be exempted from the value-added tax system. Reflecting the concerns of trade and industry, all the export promotion schemes, including the post-export duty entitlement passbook (DEPB) scheme with value caps, are being continued.

Quantitative restrictions being maintained by New Delhi on grounds of exemptions provided under article 20 of the general agreement on tariffs & trade is also likely to remain undisturbed. In regard to exports, most of them have been freed from such restrictions, barring onion, jute seeds, iron ore and chrome.

There may not also be any major changes in respect of the scheme for status holders such as export, trading, star trading and super-star trading houses as they already enjoy a number of new concessions under the present policy.

Officials explain that one of the main reasons for continuing with all the current duty-exemption schemes is that they contribute roughly 80 per cent of total exports. These schemes are advance licence scheme, export promotion capital goods scheme, and the EOU and SEZ schemes.

The officials further point out that these schemes cannot be rationalised and converted into a single one in the absence of a suitable mechanism for rebating all indirect taxes such as octroi, mandi tax, entry tax etc by the states. What has made the position complicated is the indecision by the many a state on introducing VAT from Tuesday.

Among the measures taken to promote SEZs include duty free import/domestic procurement of goods for development, operation and maintenance of SEZs and units, external commercial borrowings without any maturity restrictions through recognised banking channels.

Other benefits available are permission to set up off-shore banking units in these zones, exemption from service tax to SEZ developers and the units therein, Central sales tax exemption on sales made from the domestic tariff area to SEZ units, 10-year income tax exemption for developers during the first 15 years of operation, income tax holiday for the first five years, and 50 per cent exemption during the next two years to SEZ units.