The Exim Policy 2003-04, announced by Arun Jaitley, Union Minister of Commerce & Industry and Law & Justice, here today has identified service exports as one of the potential growth engines for the future. Health care sector is the major non-traditional sector to be benefited out of the new policy initiative.
A new look Export Promotion Capital Goods (EPCG) Scheme in order to expand the manufacturing base for India's exports including the small scale sector; incentives to status holders with premium on high growth; removal of restrictions on exports; measures to facilitate investments in Special Economic Zones (SEZs); reoriented export cluster development scheme and procedural simplification aimed at drastic reduction of transaction costs were also highlights of the new Exim Policy. The DEPB (Duty Entitlement Pass Book) Scheme is being continued and a facility for provisional DEPB rate has been introduced to encourage diversification and promote exports of new products.
Removal of quantitative restrictions on import of 69 items covering antibiotics, animal products etc and removing all family planning items except condoms from the restricted list of imports are also decisions that are to affect the healthcare/drug industry sector.
As per the policy statement, the central government is to set up a group consisting of representatives of Department of Commerce, Central Statistical Organization, RBI, DGFT and Director General of Commercial Intelligence and Statistics, Kolkata, to recommend to the Government a system for collection and maintenance of data relating to “export of services”.
"Services" as defined in the Exim Policy in Para 9.46 include all the tradable services covered under the General Agreement on Trade in Services and earning free foreign exchange. Similarly, " Service providers" have been defined in Para 9.47. List of services has also been included in Appendix 36 of the Handbook which is based on the General Agreement on Trade in Services.
However there is no proper system for collecting reliable statistics for export of services. The Exim Policy has taken note of this and hence announced the intention to set up the expert group.
“Since there is no uniform standard in the world for this purpose, we have decided to set up a Group. Till such a system is finalised and put in operation, we propose to base the implementation of the Scheme of promotion of services exports on free foreign exchange earned by any of the service providers listed in the Handbook", the minister informed.
Services exports are still a new concept for the country. “We have to recognize the fact that with the possible exception of the software sector, we have not even made a beginning. Keeping this in mind and in order to both facilitate and promote export of services from other sectors, we propose to allow import of consumables, office and professional equipments, spares and furnitures up to 10 per cent of the average foreign exchange export earning in the previous three years. Since many of the sectors have not even made a beginning in the direction of exports, we propose to extend the facility even to new comers against Bank Guarantee to the extent of the revenue sacrificed. This will be subject to actual user condition. We expect that this would particularly help the Health Sector for which the Finance Minister has already given a strong signal for India to emerge as a major destination for health services,” he explained.
The policy has laid much stress on the importance of SEZ Scheme and there has been a conscious effort to ease the rules and regulations binding the sector. Realising the contribution of 100 per cent EOUs, to the export performance of the country, we are taking a major step in the simplification and codification of rules, regulations and procedures applicable to SEZ and EOU units. All these rules and regulations are being put in one place. This should greatly facilitate both potential investors as well as existing units in these sectors, he said.
Modifications made to the EPCG scheme includes an extension of the scheme for pre and post production facilities, inclusion of import of spares, withdrawal of an additional export obligation of 50 per cent for products in higher product chain and inclusion of capital goods upto 10 years under the scheme.
The initial response from the pharma industry associations to the Exim Policy was not so enthusiastic. They felt that the run-on-the-mill policy has not considered any specific demands from the industry.