The commerce ministry on Friday eased norms to offer a conditional one-time relief to traders from select sectors from maintaining average export obligation under a scheme for capital goods, in light of the Covid-19 outbreak.
Traders from three sectors — hotels, healthcare and education — are not required to maintain average export obligation for FY21 and FY22 under the Export Promotion Capital Goods (EPCG) scheme. They will also have the option to extend the export obligation for a longer period without paying any fees.
Under the EPCG scheme, traders are allowed to import capital goods at zero duty if they take on export obligation.
The extension is being granted without the payment of composition fees, the Directorate General of Foreign Trade (DGFT) said in a public notice. Composition fees are usually slapped on traders who fail to honour their re-export commitment within a stipulated period and seek the extension of the permit.
The move is a part of the DGFT’s efforts to promote ease of doing business and help exporters at a time when outbound shipments of merchandise are faltering due to a demand slowdown in top markets like the US and the EU. Goods exports shrank 12.2% on year in December, having witnessed a marginal rise in November and a steep 16.7% contraction in October.
Already, the DGFT has decided to slash the composition fees for the extension of re-export permits under the advance authorisation scheme (AAS). For instance, the composition fees in most cases used to be as much as 0.5% of the freight-on-board value of the unfulfilled export obligation per month. However, under the new regime, the fees could be fixed at flat rates of `10,000-30,000, depending on the value of the unfulfilled export commitment. Under the AAS, exporters get to import inputs at zero duty after undertaking obligation to re-export finished products within a stipulated period.