Maran unshackles exports
Chambers lavish in praise
Duty-free fuel for captive power
Extended warranty from Maruti
Polymer firms sniff revival

New Delhi, March 31: 
Faced with sluggish exports, the government today unveiled a new five-year exim policy, removing all quantitative and procedural hurdles while giving various sops to agri-exports and special economic zones to achieve $ 80 billion annual exports by 2007.

Co-terminus with the Tenth Five-year Plan, the policy announced by commerce minister Murasoli Maran also improved export incentive schemes like the popular duty entitlement passbook, advance licence and export promotion credit guarantee, besides giving transport assistance for agri-exports.

The 2002-07 policy, first after total liberalisation of imports last year, seeks to diversify markets with new programmes for exports to Africa and CIS countries and provides more benefits to industrial clusters, cottage and handicrafts exports and the hardware sector.

“We propose to remove all quantitative restrictions on exports except a few sensitive items. Only a few items have been retained for exporting through state trading enterprises,” Maran said.

“Even the 3 per cent export target for this year is unlikely to be achieved. If the exports are not negative we will be happy,” Maran said but expressed confidence that the policy will push exports in the coming years to achieve an annual 11.9 per cent growth projected in the medium-term export strategy.

“The 18 per cent growth recorded in January has now been revised to 15 per cent. February could be bad,” he said.

Declining to hazard a guess on next year’s export target, Maran said this exercise is done in the month of May after consulting various commodity boards and export promotion councils.

With the lifting of quantitative restrictions on exports this year, the policy has made a paradigm shift on its focus from import liberalisation to export orientation, Maran said.

To make special economic zones (SEZs) internationally competitive, Maran announced that for the first time in India, overseas banking units will be permitted to be set up in SEZs.

These would be exempted from cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements and would give SEZ units and developers access to international finances at global rates.

“In a world dominated by the World Trade Organization, India cannot be left behind and SEZs are the symbols of our endeavour to remain internationally competitive and relevant,” he said, adding that the government has already sanctioned setting up of 13 new SEZs.

Giving a thrust to agriculture, the policy removed curbs on exports of all cultivated varieties of seeds, except jute and onion. It also provided transport subsidies to exports of fruits vegetables, floriculture, poultry and dairy products, besides lifting export restrictions to Russia on items like butter, wheat, grains, groundnut oil and cashew.

Transaction costs

In order to reduce transaction costs, Maran announced a series of procedural simplifications covering DGFT, customs and banks. These include adoption of new commodity classification for imports and exports, which will be adopted by the Central Board of Excise and Customs and the Directorate General of Commercial Intelligence and Statistics, with common classification to be adopted by DGFT and CBEC to end disputes.

It has also been decided to further simplify all schemes, reduce the maximum fee limit for application under various schemes, same-day licensing and adoption and harmonisation of the eight-digit code by customs.

Maran announced reduction in percentage of physical examination of export cargo, finalisation of application for fixation of brand rate of drawback within 15 days and direct negotiation of export documents to help exporters save on bank charges.

Adding glitter

The exim policy announced a number of benefits for the gems and jewellery sector — the second biggest foreign exchange earner after textiles. Exports from this sector in 2000-01 totalled $ 7.38 billion, and is projected to rise to $ 14.32 billion (a compound annual growth rate of 11.67 — the highest for all products as enunciated in the medium-term export strategy unveiled in January).

For a start, the customs duty on the import of rough diamonds is being reduced to zero. The import of rough diamonds will be freely allowed and the licensing regime for rough diamond has been abolished. The move is designed to help the country emerge as a major international centre for diamonds.

Maran also announced a reduction in value addition norms from 10 per cent to 7 per cent for export of plain jewellery at a value addition of 3 per cent. In another sop, the personal carriage of jewellery through Jaipur and Hyderabad has also been allowed.


New Delhi, March 31: 
Industry today welcomed the new exim policy, saying the removal of quantitative restrictions on exports and extending transport assistance for agri exports will help India capture a 1 per cent share of global trade by 2007.

“Without the removal of these restrictions, you cannot boost exports. The decision to remove QRs is a step in the right direction,” said Federation of Indian Chambers of Commerce and Industry (Ficci) secretary general Amit Mitra.

He also welcomed the provision of transport assistance for the movement of farm produce. “The movement of produce from farms to processing units was important. Agri-export zones and special economic zones will further boost exports,” he added.

Welcoming the new policy announced by commerce minister Murasoli Maran, the Confederation of Indian Industry (CII) said the fund allocated to states for export promotion could have been more, for them to meaningfully address infrastructure and other constraints.

“Even the allocation for market access initiative programme of Rs 42 crore for 2002-03 could have been enhanced to at least Rs 100 crore,” CII said, a view with which Ficci also agreed.

Assocham president K.K. Nohria felt “the policy announcements are extremely positive, encompassing all sectors, giving rise to expectations of a 12 per cent export growth.”

“The focus on export zones and goods like handicrafts, agri-exports and other non-traditional products is laudable. The continuation of the DEPB scheme, DEEC scheme and entitlement of export house status at only Rs 5 crore are encouraging moves,” he said.

Federation of Indian Export Organisations said the new policy is export friendly and will help in bridging the country’s trade deficit.

Even as it welcomed the policy, the Apparel Export Promotion Council was critical of Maran for not considering their proposal for a separate chapter for apparel exports which comprised over 12 per cent of India’s total exports.

State Bank of India chairman Janki Ballabh said permission to open overseas banking units in special economic zones would “help us provide better services to the units in the SEZs”.

Gems and Jewellery Export Promotion Council chairman Sanjay Kothari termed the policy as “forward looking”. He said “Zero per cent customs duty on rough diamonds will help the country emerge as the largest manufacturing base for jewellery”.

J.S. Bhasin, chairman, Engineering Export Promotion Council, said the engineering sector was particularly happy with the continuation of various export promotion schemes.

Meanwhile, S.K. Ghosh, all-India vice-chairman of Capexil termed the exim policy as exporter-friendly. “The exim policy is in consonance with the mid-term strategy announced by the commerce minister,” he said, and congratulated the commerce minister for addressing the cause of exporters from the north east.

H.M. Bangur, president, Bharat Chamber of Commerce said: “The exim policy contains several measures that are WTO-compatible and designed to make exports the engine of economic growth of the country.”


New Delhi, March 31: 
Export industries can go for captive power generation for which the government will give duty-free fuel, minister for commerce and industry Murasoli Maran said today.

“Even while the power situation continues to confront our industries, the export industry can go for captive power generation,” Maran said while announcing the five-year exim policy.

“Our scheme announced today will provide fuel rebates for such power ranging from three to seven per cent of the free-on-board (f.o.b) value of exports,” he said.

The rebate on fuel costs will be given to all export products under the standard input output norms (SIONs) and is designed to enhance the cost competitiveness of export products. Among the export products, the highest rebate of 7 per cent is allowed for refractory items, ferrous engineering products manufactured through forging/casting process and fibre to fabric/madeups/ garments.

Bulk drugs and drug intermediaries, glass, ceramic products, paper made from wood pulp/waste paper, pesticides/ pesticides formulation from basic stage and plastic and plastic products would be allowed 5 per cent of value of fuel as a percentage of f.o.b value.

A 4 per cent value of fuel as a percentage of f.o.b would be allowed to dye and dye intermediaries, non-ferrous basic metal and fibre to yarn. Yarn to fabric/madeups/garments have been allowed 3 per cent.


New Delhi, March 31: 
Leading car maker Maruti Udyog Ltd has announced that all its vehicles bought from April 1 onwards, will come with the option of an extended warranty cover.

The carmaker currently offers a warranty on all its vehicles for two years from the date of purchase, or till they have covered 40,000 km, whichever is earlier. It plans to extend the warranty cover to the third and fourth year after purchase.

The “extended warranty” for the third and fourth year will be available for a nominal extra charge and will be honoured at all the company’s authorised service outlets and workshops spread across the country, numbering over 1830.

“The optional extended warranty is one of the measures by the company to reassure Maruti customers about the quality and reliability of their cars,” a company spokesperson said.

Under the extended warranty scheme, the company is offering two options to customers. In the first option, customers can avail of the extended warranty for one additional year (or 20,000 km, whichever is earlier) from the date on which the two-year primary warranty ends.

In the second option, customers can choose extended warranty for two more years or another 40,000 km, whichever is earlier, from the time the primary warranty ends.

The third-year warranty for a Maruti 800, for instance, can be obtained for Rs 1,495. An extended warranty for both the third and fourth years, for the same car, will cost Rs 2,995.

Similarly, a third-year warranty for an Alto will be available for Rs 1,790, while, for an Esteem, the price will be Rs 3,495. Extended warranty for the third and fourth year combined will cost Rs 4,190 for an Alto and Rs 5,885 for an Esteem.

Eicher plan

Light commercial vehicle maker Eicher Motors will foray into the heavy vehicles market by June this year, said a senior official.

“We have already done soft launch of a 16-tonne truck in some select markets to get feedback on performance. The vehicle will be formally launched by the first quarter of next fiscal,” said Eicher motors chief executive officer Rakesh Kalra.

Eicher would launch a six-cylinder truck called ‘20:16’. The 150 horsepower truck would have a gross vehicle weight of 16.2 tonnes and a payload of 10.5 tonnes. “Next on the cards is a bus which would be followed by a multi-axle truck,” Kalra said.

Eicher has till date invested Rs 100 crore to manufacture these heavy commercial vehicles at its Pithampur plant in Madhya Pradesh.


Mumbai, March 31: 
Laid low by plunging prices and sagging demand for much of the year, the polymer industry is now sensing the first stirrings of a recovery. The rising cost of crude has made key inputs in the manufacture of polymer—primarily naphtha—dearer, prompting buyers to amass stocks in anticipation of future spikes. This has been accompanied by what many companies are now calling a “requirement boom”.

Companies expect the current pick-up in demand to hold in the new fiscal, and lead to better prices. While growth rates have largely been hovering in the region of 10-15 per cent so far, industry feels it will be over 20 per cent in 2002-03.

Says a senior Haldia Petrochemicals (HPL) official: “Though demand had ebbed globally following the September 11 attacks, we are now experiencing a revival. This has resulted in excellent offtake this month. There is likely to be a complete turnaround in 2003.”

An IPCL executive echoed a similar sentiment, saying he expects the demand growth to drive up prices of key polymers like polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC) next month.

In March, domestic prices of PVC were raised by over Rs 3,000 per tonne to Rs 33,050 per tonne, that of PP by Rs 1,500 per tonne; the prices of PE were left unchanged.

However, some are circumspect about the revival. “Though the situation is looking slightly better, it is still too early to say whether there is an uptrend,” said the head of a leading petrochemical company’s polymer division.

March, he pointed out, is a time when demand typically picks up as consumers who postpone purchases in the run-up to the budget start stocking up.

“It is normally observed that prior to the budget, there are no significant purchases as user industries expect excise and customs duty relief. But demand perks up soon after the budget. Consumers are also buying on fears that international prices will go up further.” International crude prices, currently hovering around $ 24 a barrel, have sent the cost of naphtha—the main intermediate for polymer firms—soaring to $ 220-225 per tonne.

This, coupled with stock-piling by customers, have driven up the prices of various polymers.

For instance, polyvinyl chloride is now selling at over $ 500 per tonne. Rumours that supplies will be tight in future have thrown up the possibility of prices touching $ 600.

Similarly, the price of polypropylene, which climbed up by over $ 60 per tonne earlier this month, is now close to $ 520 per tonne. That of polyethylene, which has seen some amount of stock piling, is projected to top $ 570.

Reliance Industries, IPCL and HPL are among the major polymer manufacturers in the country. Reliance, with a market share of over 52 per cent, is the largest producer. Telecom, packaging, food and beverages and consumer durables are among the big user industries.


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