Sop for auto sector focuses on new markets

EXIM MATTERS

Amidst the gloom in financial markets, the automobile sector has something to cheer. Under the Market Linked Focus Market Scheme (ML-FMS), exporters of auto parts such as brake linings, gear boxes, drive axles, shock absorbers, radiators, silencers, exhaust pipes, steering wheels, gaskets and other auto parts can earn duty credit of 1.25 per cent of their free on board (FOB) value against their exports to Argentina, Brazil, Japan, South Africa, Korea RP, Iran and Russia. The incentive is available against exports made from April 1, 2008.

The duty credits can be utilised to pay customs duty on any freely importable goods. The duty credits are transferable.

Similar incentives have been extended to export of motor cars up to 1500 cc capacity to Bahrain, Bangladesh, Kenya, Kuwait, Nigeria, Pakistan, Philippines, Saudi Arabia, Singapore, Russia, Tanzania, Turkey, UAE and Ukraine and export of motor cycles up to 500 cc capacity to Nigeria, Indonesia, Kenya, Tanzania, Mexico, Singapore, South Africa and Egypt. Chassis fitted with engines will also get incentives against exports to Algeria , Dubai , Qatar, Nigeria, Kenya, Oman , Tanzania, Singapore, Saudi Arabia, Egypt, Kuwait and UAE.

The ML-FMS was introduced this year to encourage exports of products of high export intensity to countries where penetration is low. In August, bicycles and their parts were notified for exports to Tanzania, Nigeria, Kenya, Brazil and Ukraine were notified.

The benefit under the ML-FMS is available provided no other benefits available under Chapter 3 of the Foreign Trade Policy (FTP) are claimed against the same exports. For exports under free shipping bills, the exporter has to declare his intent to claim the benefits under ML-FMS. The FTP says that shipments under the scheme shall also be counted for fulfilment of EPCG (Export Promotion Capital Goods) export obligation.

However, the EPCG customs notification says that the goods on which benefits of reward schemes are taken shall not be counted towards the fulfilment of the export obligation under the EPCG scheme. This contradiction needs to be got resolved.

The commerce ministry has banned imports of dairy products, including milk and milk products from China . This follows reports of contamination of such products that caused illnesses in children. A few days earlier, the ministry banned imports of meat and poultry products from avian influenza-affected countries. The ministry relaxed the ban on export of non-basmati rice. It should also examine the scope to promote exports of products where China is beating a retreat.

The FTP has been amended to allow Duty Entitlement Passbook (DEPB) against supplies of goods from Domestic Tariff Area (DTA) to SEZ (Special Economic Zones) Developers, even when payment is received in rupees. For supplies to SEZ units, this relaxation is not made available. This relaxation operates prospectively. The trade needs to lobby for retrospective effect.

Service providers will now be eligible under the Served From India Scheme even on the basis of current year performance. Indore has been added in the list of ‘Towns of Export Excellece’ making it eligible for financial assistance in upgrading infrastructure. Central sales tax re-imbursement to export oriented units will be available on purchases for production of goods as per EOU Scheme only.

The Central Board of Excise and Customs has issued helpful instructions for issue of installation certificates under EPCG scheme and certificate for receipt of goods under deemed export schemes.

tncr@sify.com