Import Curbs To Be Eased In New Policy

The new Export-Import (exim) policy for April 1997-2002, which will be announced on April 1, will further relax import restrictions. The commerce ministry had relaxed or removed import restrictions on 161 items on Saturday, leaving over 3,000 items still on the restricted list.

According to sources, some items on the restricted list will be shifted to the special import licence (SIL) while some SIL items will be moved to the open general licence (OGL) list as part of the governments policy of lifting quantitative restrictions on consumer goods imports. However, heavy tariffs are likely to be imposed on these items.

 

In fact, an average import duty of 82.4 per cent has been maintained on the 161 items on which import restrictions were eased on Saturday. Of the 161 items, 92 were moved from the restricted to the SIL list, while 69 items were shifted from the SIL to the OGL list. Most of the items are consumer goods including office machines and equipment, air-conditioning units, security items, cosmetics, and glassware.

The average duty of 82.4 per cent on the items is expected to protect domestic companies from heavy imports. Commerce ministry sources said that the duty on almost all the items is over 80 per cent. The move to the OGL list simply implies that the goods can now be imported without any licences.

The movement of items from the restricted to the SIL list is also unlikely to affect the premium on SIL items. The Federation of Indian Export Organisations secretary-general R K Dhawan told Business Standard that he did not expect the premium to fall or improve on account of the changes announced last week. Ministry sources claim that the premium is around 13 per cent, although exporters argue that it is ruling in the 10-12 per cent range.

On the basis of the harmonised code, it has been calculated that approximately 70 per cent of all the items being imported are either freely importable or can be imported under SIL. Restrictions on the remaining items will have to be removed over the next five to seven years. However, 10 per cent of the items will continue to remain under restrictions due to safety, defence and other strategic reasons. In other words, 600 tariff lines will have to go every year over the next 5 years or so, said a senior official.

It has been argued that even if imports were freed, there would be not be a substantial rise in imports of consumer durables. Currently, capital goods account for approximately 20-25 per cent of all imports, while consumer goods account for about 15 per cent. Of the consumer goods imported, a large proportion are mass consumption items like sugar, pulses, edible oils, coffee, skimmed milk powder and so on.