For the benefit of those who may not be quite clear on the new foreign trade policy, as announced by the government yesterday, I have prepared an explanation in a simple and easy-to-understand question-answer format.
Question: What in essence is the foreign trade policy?
Answer: The FTP in essence is the suspension of the CCS in contect of the abolition of supplementary licences and enlargement of the REP, which will now be called Exim Scrip. The ES will be freely tradeable.
Question: Does the new REP, now to be called ES, include the facilityof bringing back a VCR from Dubai without paying the custom duty?
Answer: The scheme is intended to cover all non-essential imports.
Question: Who will benefit most from the scheme, Mr. Dhirubai Ambani or Mr. Nusli Wadia?
Answer: Industrial units with PMP (phased manufacturing programmes) would benefit by meeting their IR (import requirements) either by buying REP or earning REP through EC (export channels). All SL (supplementary licences) shall stand abolished except in the case of SSS (small scale sector) and for the producers of life-saving drugs and equipement.
Question: Does it mean that anybody can do import-export business without going to Delhi to get a licence?
Answer: all items listed in the LPL (limited permissible list). OGL items imported by PMP units and all items listed in the appendix 4 and appendix 9 of the export-import policy will be imported through the REP route.
Question: What about the smugglers? Will the new policy encourage the parallel economy or world against it?
Answer: The unlisted OGL category, that it items which are not mentioned in any list of exim policy but deemed to be in the OGL, will be imported exclusively through the REP scheme.
Question: What about the budget?
Answer: In the interim budget for 1991-92, of the estimated export subsidiary of Rs. 2,316 crore, Rs. 2,095 crore was slated to be disbursed as CCS for export products, in lieu of duty drawback for deemed export. The suspension of CCS would lower the export subsidy and consequently the government non-plan expenditure in ares of fiscal and agro-industrial policy.
Question: Is all this good for the country or bad?
Answer: The IMF says it is good.