Sils Worth Rs 1000cr To Hit The Market Next Month

Special import licences (SILs) worth at least Rs 1,000 crore are expected to enter the market from April 1. This is likely to bring down the premium on the licences from the current 13 per cent, say exporters.

However, the new export import policy will lead to an increase in the premium, with the movement of a number of goods from the restricted list to the SIL list. This will be partly offset by a corresponding movement of items from the SIL list to the open general licence (OGL) list.

The number of items permitted for import through these licences directly affects the premium on them and acts as an incentive for exporters.

 

The premium on SIL, a major incentive for exporters, has been rising steadily since October 1996. Despite this, the export growth rate has not picked up. The premium in October was hovering around 8-9 per cent.

At present the total licences on SIL amount to Rs 1,500 crore. This is expected to rise to around Rs 2,500 crore. The additional Rs 1,000 crore will be on account of the extra SIL incentives given during the year to the non-export house category of exporters, upgraded entitlement of export houses by 1 per cent and the extra SIL given for exports to 43 countries.

In August 1996, the ministry of commerce extended the coverage of the SIL scheme to small-scale exporters with an average turnover of Rs 2 crore in the preceding three years or Rs 5 crore in the preceding year.

In September 1996, faced with a fall in export growth rate from 14-15 per cent to 11 per cent, several items for which a large number of import licences were sought were moved to the SIL list. The items included paints, varnishes and lacquers.

The ministry also increased the rate of SIL entitlement to the existing status holders by 1 per cent across the board on the net foreign exchange (n.f.e.) value or free on board (f.o.b.) value of exports released by them during the current year.

In the last policy, exports to new markets like Latin America, Central Asia and certain other countries were given double weightage in categorising export houses, star trading houses and super star trading houses.

Federation of Indian Export Organisations secretary-general R K Dhawan says: All these steps are going to result in Rs 1,000 worth of SILs coming into the market.

The policy will finally determine the premium. It is expected that a large number of restricted list items will be shifted to SIL and OGL in April.