Hurdles to unbridled import of used cars
Export zones to push farm items abroad
Chambers shower praise
Curbs galore to check import tide
VST backs ITC open offer
Goodricke on the prowl in Assam

New Delhi, March 31: 
For auto majors scared of the impending flood of cheap second-hand imports ending their grip over the market, its time to let the champagne flow.

The Exim policy, unveiled today by commerce and industry minister Murasoli Maran, has brought in a set of non-tariff environmental and vehicle design stipulations for imports of second-hand cars, which will effectively shield the domestic auto industry.

The government has closed its doors on left-hand drive vehicles and those more than three years old. Further, it stipulates the second-hand vehicles should have a minimum road worthiness of five years, with an assurance to provide service facilities within the country.

The new cars, jeeps and Land Rovers which can be imported from April, should have an engine capacity of less than 1000 cc or beyond 2,500 cc.

Second-hand automobiles should have a speedometer to indicate the speed in kilometres and the photometry of the headlamps should suit the “keep left” traffic.

The Exim policy defines a second-hand vehicle as one which has been sold, leased or lent, or been registered for use in any country according to the laws of that country, prior to its import into India. All vehicles will have to conform to the provisions of the Motor Vehicle Act, 1988.

Besides, all new vehicles being imported into the country, should not be manufactured or assembled in India, not registered for use in any country prior to their import and should not be sold, leased or lent before their import.

Importers or dealers will also have to submit a certificate issued by a testing agency that the vehicle has been tested immediately before export to India and conforms to the regulations of the Motor Vehicle Act.

An elated B.V. R. Subbu, director marketing Hyundai Motors India, said: “The government appreciates our role and has consequently taken these steps. For the government, the choice was between industrialisation and de-industrialisation and they have voted for the former.”

Industry feared that they would be washed away by the flood of cheap second-hand imports, and many would be forced to close shop.

Jagdish Khattar, managing director, Maruti Udyog Ltd, said: “The exim policy has laid down certain standards for the import of passenger cars, keeping in view road safety and environment considerations.

“While offering consumers the option of importing cars, the policy safeguards their interests by ensuring that only players with a commitment to quality and service are able to do business,” he added.

Scooters with an engine capacity over 50cc, but not more than 500cc, can also be imported. For motorcycles, the engine capacity should be over 250cc but not exceed 800cc.

Imports of second-hand lorries and trucks, both assembled and completely-built units, over 5 tonnes, other than refrigerated trucks, have been allowed. The same rule holds for imports of new assembled or completely built lorries and trucks.

Another rider for second-hand vehicle imports is that they will be able to enter the country only through the Mumbai port. New vehicles, however, will be allowed to make their entry through the Nhava Sheva (Mumbai), Calcutta and Chennai ports.


New Delhi, March 31: 
The Exim policy announced today set up agricultural export zones to provide farm goods improved access to global markets. State governments will identify product-specific agri-export zones where they will provide a comprehensive package of services such as credit and farm research. Farmers in these zones will also get access to common infrastructural facilities such as sorting, grading, polishing, packaging, cold storage, transport equipment, refrigerated vans and X-ray screening facilities, which can be imported at low duties.

Besides, exporters of agricultural products will be treated as star exporters, even if they achieve one-third of the floor limit prescribed for the status.

The Exim policy also permits duty-free import of infrastructure and capital goods to special economic zones (SEZs). Further, units in SEZs can bring back their export proceeds in 365 days, as against the normal period of 180 days, and can retain 100 per cent of those proceeds in the EEFC account. SEZ trading units will also be permitted to sell goods in the domestic tariff area (DTA) and sub-contracting of a part of the production will be allowed.

Amortisation of the value of imported capital goods is being spread over a period of eight years, instead of the present five years. This is to facilitate greater flexibility, and to attract capital-intensive units into the SEZ.

The extension of the annual advance licence facility for deemed exports has also been extended.

The policy also strengthened the annual advance licensing scheme by hiking the entitlement for exporters from 125 per cent to 200 per cent, besides extension of this facility to deemed exports.

As an early warning system, monitoring of imports has been streamlined and statistics of all the 1,0202 tariff lines will be available within two to three months, as against 10 to 12 months earlier.

A standing group is being set up to monitor imports comprising commerce, revenue, small scale industry and animal husbandry and dairy secretaries, besides the director general of foreign trade (DGFT). This group will function as a ‘war-room’ for tracking, collating and analysing data on 300 sensitive items of importance to the public. A dedicated special cell has also been constituted in the commerce ministry to co-ordinate the formulation of India’s stand at the World Trade Organisation with the state governments, which will also exchange information and views.

The government has also extended the validity of duty-free replenishment certificates (DFRC) from 12 months to 18 months, besides dispensing with technical characteristics for items on a small negative list.

A jewellery exporter with an average annual turnover of Rs 5 crore or more will be allowed to operate up to five bank accounts.


New Delhi, March 31: 
Leading industry and trade chambers today hailed the new Exim policy saying it has struck a fine balance between import liberalisation and measures to boost exports. “The quantitative restrictions for 715 items have been removed, but adequate safeguards were in place by way of institutional mechanisms like adjustment of tariffs and imposition of anti-dumping duties,” the Confederation of Indian Industry (CII) said in a statement.

The policy and the Union Budget will compliment each other in taking India and the Indian industry forward, said CII president Arun Bharat Ram.

Terming the new policy as progressive, Raghu Modi, president of the Associated Chambers of Commerce and Industry (Assocham), said commerce minister Murasoli Maran’s vision to achieve a target of 1 per cent of the world trade share for India by 2005 was laudable. He said the applicability of the duty exemption and export promotion capital goods (EPCG) scheme would help achieve the export growth target set by the government.

The Federation of Indian Chambers of Commerce and Industry (Ficci) said Maran’s boost to agri-exports, new market access initiative and involvement of states should help raising the country’s exports to the targeted level.

“The massive emphasis on agri-exports will altogether transform the agro economy and bring far greater efficiency,” said Chirayu R Amin, Ficci president.

The industry also felt that procedural simplification to reduce the interface of exporters with the director general of foreign trade (DGFT) by cutting down the number of committees from nine to four and streamlining of others would reduce the transaction costs and cumbersome procedures.

Indian Chamber of Commerce (ICC) president C K Dhanuka said the government must keep a strict watch on imports in the coming year to ensure that serious injury was not caused to the domestic industry following removal of the QRs.

The Bengal National Chamber of Commerce and Industry (BNCCI) complimented Maran for initiating policy measures for the first time involving the state governments to play a major role in export promotion.

However, Sushil Bagla, president of BNCCI expressed concern for doing away with licences for setting up units for items reserved for the SSI sector.

Regarding the tea industry A. Monem, vice president of Williamson Magor & Co Ltd, said, “The opening up of imports is no threat to the industry.”

“In the short term, there is not much to worry about the dairy industry as globally the prices of dairy commodities are high and the bound rates are reasonable,” said Animesh Banerjee, president of Indian Dairy Association.

Suresh Khanna, secretary general of Consumer Electronics and TV Manufacturers Association, however, demanded “a differential duty for the equipment for colour TV.”


New Delhi, March 31: 
The Centre has formulated its Exim policy for 2001-2002 on the assumption that there is unlikely to be a surge in imports, director general of foreign trade N.L. Lakhanpal said here today.

Addressing the Confederation of Indian Industry shortly after Union commerce minister Murasoli Maran announced the policy, Lakhanpal said the Centre was wary of the opposition to the opening of India to world trade.

Till last year, the quantitative restrictions were lifted mostly on import of raw materials. But disquiet had been growing since 2000. “In some cases, there were genuine reasons for this. So, while we have opened up to international competition, there are also safeguards against unfair or unequal competition,” he said.

Apprehensions that India will be flooded with cheap imports were unfounded because there is little evidence of it.

“Perfumes and electronic goodies were available even earlier—in the chor bazaars. Now they will be openly available and the government will earn revenue,” said Lakhanpal.

To manage imports, the Centre has also decided to promote imports through two major initiatives announced in the policy—agri-export zones and market access initiative. Lakhanpal said the market access initiative should enable Indian industry to carry out sector-wise advertising and media campaigns overseas.

Exporters sore

The country’s export organisations today said that the Exim policy had failed to address their immediate needs.

The Federation of Indian Export Organisations (Fieo) said the policy “can be judged only after practical implementation of its provisions at the operational level.”

Fieo president K.K. Jain said unless the transaction cost of 18 per cent to 20 per cent which the exporters was bearing today was reduced to a reasonable level, it would be difficult for exporters to compete in the international market.

Jain expressed concern that nothing had been done in respect of the exporters plea to extend the validity of the special import licence. Besides, there was no special attraction or benefit for the recognised status holders.


Hyderabad, March 31: 
The curtains have come down on the long-drawn VST Industries takeover issue, with the company’s board advising all its shareholders to take the option offered by ITC.

As the two suitors — Bright Star Investments and ITC Ltd — waited with bated breath, it is the BAT group company which seems set to walk down the aisle with the bride. BAT, the global tobacco major, holds a more than 30 per cent stake in VST.

Both Bright Star and ITC had made a public offer to pick up a 20 per cent stake in VST.

The Damanis of Bright Star had come out with a public offer at a price of Rs 112 per share, while Russell Credit Ltd, a finance subsidiary of ITC, came out with another offer at a higher price of Rs 115 per share.

VST said the strategic investor, ITC, is likely to enhance shareholder wealth, while the financial investor, Bright Star, will neither add value nor appreciate deployment of funds for exploring the potential of the industry.


Calcutta, March 31: 
Goodricke Group Ltd (GGL) is looking for worthwhile acquisitions of tea estates in Assam. Talking to newspersons after the company’s 25th annual general meeting, K. S. David, managing director of GGL said, “We are looking at some worthwhile acquisitions.”

Chairman P. A. Leggat added, “We will buy the right garden at the right price.”

Goodricke has 12 gardens in the Dooars, two gardens in Assam and three gardens in Darjeeling. Its total production in the year 2000 stood at 16.78 million kg. The company, which registered sales of Rs 167.9 crore in the year 2000, is also seriously considering a move to export its teas to Pakistan, which has a total consumption of 180 million kg.

The company’s exports were higher at 3.1 million kg, valued at Rs 36.6 crore, as compared with 1.85 million kg in 1999, worth Rs 23.5 crore.

Addressing shareholders of the company, Leggat said during 2000, instant tea exports were not very encouraging and were below the installed capacity.

“To accelerate sales growth of instant teas, the company is working on a new strategy of consignment sales to the North American market by warehousing bulk teas in the US east coast. This will enable US and Canadian buyers to collect the tea in suitable lots. Later, this facility will be extended to Darjeeling and other speciality teas,” the chairman said.

As on January 1, 2001, the company has no long-term or institutional borrowings. The interest on borrowings has steadily come down over the last three years and the year 2001 should witness further reduction.

Packet tea operations, said Leggat, had an unfavourable year with lower off-take, due to a glut in the market and severe price competition. With easy availability of cheap teas in the market, traders as well as consumers were reluctant to pick up the more expensive packet tea. This also encouraged other traders to market local low-priced packets.

GGL launched two new brands last year — Zabardast and Mehak. Zabardast is expected to generate volume sales, targeted at the economy segment of the rural market.


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