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EPCG norms on second-hand imports now a bone of contention

K.R. Srivats
Anil Sasi

New Delhi , June 5

AS part of the efforts aimed at improving export competitiveness of Indian goods, the Commerce Minister, Mr Kamal Nath, may soon be required to review the policy on import of second-hand capital goods under the export promotion capital goods scheme (EPCG).

Currently, second-hand capital goods that are more than 10 years old cannot be imported under the EPCG scheme of the Exim Policy.

With the next edition of Exim Policy (2004-05) slated for July, the Commerce Ministry is faced with increased demand from the capital goods user industry in the country to relax the existing stipulation. On the other hand, the domestic capital goods manufacturers are making a case against any relaxation to the current policy.

"You must look into the interest of the domestic capital goods manufacturers before relaxing the restriction on second-hand capital goods," an official from BHEL pleaded to the Commerce Minister, Mr Kamal Nath, here at an interactive session on Exim Policy, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Some of the FICCI members from the user industry argued that old machines are available in international markets at affordable prices. "These machines, though more than 10 years old, have long residual life that we could take advantage of. The decision of importing such machines should be left to the entrepreneur as he is taking the risk. Why should there be a restriction of 10 years for second-hand capital goods imports under EPCG scheme?" a leading industrialist asked.

Mr Kamal Nath played it safe by asking FICCI to give its submission on this issue after getting consensus from its members. He also wanted FICCI to submit a paper on their concerns on free trade agreements.

The Commerce Secretary, Mr Dipak Chatterjee, however, pointed out that it was at the instance of chambers like FICCI that the existing restriction on second-hand capital goods imports was introduced.

On Special Economic Zones (SEZs), Mr Kamal Nath promised that the SEZ Bill would soon be introduced in Parliament.

He also made it clear that there is no move or intent on part of the Government to dilute the Export-Oriented Unit (EOU) scheme.

"We are not thinking of diluting EOUs. We must strengthen EOUs. SEZ is not replacement of EOUs. Such zones are promoted to complement EOUs, since SEZs offer site-specific advantages, EOUs that are not part of the sites would face impediments," Mr Kamal Nath said.

He said that the thrust of the forthcoming Exim policy would be on increasing exports from the agro sector and creating employment opportunities for the rural youth.

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