Page 273 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes the basis of the deemed import content of the concerned export product as per SION,
respective basic customs duty and value addition (subject to a minimum of 33.3 per cent)
achieved in export. The import under DEPB is exempted from the payment of additional
and special additional custom duties. However, anti-dumping, safeguard and
countervailing duties, if imported against it are freely transferable. The EXIM Policy for
2001-02 has modified the scheme by adding a provision for claiming DEPB against advance
payment of import duty, rationalisation of the DEPB rates in line with the changes in
customs duty in the budget, coverage of additional ports, etc. It is learnt that the DEPB
scheme may not continue in the present form in the forthcoming EXIM policy since certain
existing provisions have been identified as incompatible with the relevant provisions of
the World Trade Organisation (WTO).
These schemes have been implemented with the main purpose of encouraging the exporters
by facilitating duty-free import of quality inputs at international prices. Thus the duty-
free imports are expected to enhance the competitiveness in cost and quality of Indian
products in the world market. The perceived objectives of the schemes are well-founded
against the crucial need to enhance export earnings. However, the range of products that
can be imported under these three schemes has been widened over time on account of the
phased elimination of QRs and removal of other import restrictions.
Elimination of quantitative restrictions: Under Article XI of the GATT 1994, no prohibitions
or restrictions other than duties, taxes or other charges shall be initiated or maintained, by
any contracting party on importation and exportation of any product. Notwithstanding
the provisions under the Article XI, quantity or value based restrictions on imports can be
applied to safeguard the external financial and BOP positions of the contracting parties
(Articles XII and XVII of the GATT 1994). Again, QRs and other import restrictive measures
can be applied on grounds related to the protection of public morals, human life, animal
life; plant life, national treasures, etc (Article XX of the GATT 1994) and on national security
grounds (Article XXI of the GATT 1994). By 1997, India had successfully negotiated a
mutually agreeable solution to phase out QRs taken on BOP grounds over a six-year
period ending March 31, 2003. But when the Dispute Settlement Panel and Appellate Body
of the WTO ruled against India in a dispute filed by the US, India had to commit the
removal of QRs before April 1, 2001. On March 31, 2000, QRs on 714 items were removed
followed by the removal of QRs on another 715 items on March 31, 2001. Thus by 2001, QRs
on 9,363 tariff lines (at HS 10-digit level) have been dismantled. However, India is still
maintaining QRs on around 800 items under Articles XX and XXI of the GATT 1994.
Though the elimination of QRs was initiated in the early 1990s, the hue and cry against it
has acquired momentum only during recent years. The main reason for the phenomenon
was that most of the products for which QRs have been removed during the recent years
are widely used consumer goods and sensitive items [Goldar and Mehta 2001: 990-91]. In
order to tackle the consequences of the removal of QRs, the EXIM policy announced on
March 31, 2001 included the creation of a ‘war-room’ to track, collate and analyse import
data on 300 sensitive items which are of importance to the public and advise the government
if situations of massive imports of any items arise [GOI 2001: 13]. Perspectives on
Rationalisation of Duty Exemption and Remission Schemes: Under ALS and DFRC, all
items with SION and meeting other conditions can be imported but licensing is mandatory.
Hence, the authorities in times of exigency have the liberty to restrict imports of certain
items on an ad hoc basis though the same is not evidently established in the relevant
orders or EXIM policy. But with the liberalisation of imports and elimination of different
non-tariff barriers, the chances of a prohibition of the duty-free import of individual items
have become remote. Under the DEPB scheme, any item for which QRs do not exist can be
imported. Thus the range of items which can be imported under DEPB got widened with
Contd...

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