Exim Policy has nothing for IT

India has kept its tryst with destiny to
join the new league by removing QRs for the remaining 715 items bidding goodbye
to the balance of the quota Raj. Domestic market has been opened to all kinds of
imported consumer goods, ranging from cheese to perfumes to the finest wines and
snazziest cars.

The opening up is certainly at a price as
the import duties have been fixed at pretty high levels for the protection of
domestic industry. Murasoli Maran, Minister for Commerce and Industry, has
expressed his satisfaction on the export front complimenting both the industry
and conducive environment created by the Government.

However, the IT industry finds itself at a
loose end as it barely gets a mention in the policy. The important changes
relating to IT are as under.

1. The
   export obligation on setting up of Software Technology Parks (STPs) has been
   reduced with reduction in net foreign exchange earning as a percentage of
   exports from 20 to 10 percent. The minimum export obligation would now
   be--"$ 0.25 million or three times the CIF value of imported capital
   goods, whichever is higher" down from "$ 0.25 million or five
   times the CIF value of imported capital goods, whichever is higher."

2. There
   is no change in the requirement for custom bonding by STPI units. The
   requirement of custom bonding continues for STPI units and the industry
   demand for dispensing the same has not been accepted.

3. Export
   Promotion Capital Goods (EPCG) scheme for the software industry remains
   unaltered. Capital equipment can be imported by the software industry on
   payment of five percent duty against an export obligation equivalent to five
   times the CIF value of capital goods on FOB basis or four times the CIF
   value of capital goods on NFE basis to be fulfilled over a period of eight
   years reckoned from the date of issuance of the license.

4. The
   Special Import License (SIL) scheme as an incentive to exporters has been
   completely dismantled as announced in the Exim policy last year. SIL has
   become irrelevant as all items have been shifted to the free list of imports
   and there is no need for a license to import them any more.

The Minister also announced that the
Government has decided on extending time till March 31, 2002 for meeting export
obligations under the EPCG scheme for licenses issued during

1990-96 upon execution of bank guarantee
with the licensing authority. This has been done to regularize default on late
completion of obligations and also to allow one-year time till March 31, 2002
for meeting the export obligation. Formal notification in this regard is
expected to be issued soon.

Mohan Khanna GM, Zensar Technologies Ltd