Under this chapter, 5.2 (h) says that motor vehicles can also be imported as capital goods by certai

This blog will focus on India's foreign trade. The scope will include trade policy, trade data/statistics and discussions travel magazines on contemporary issues affecting India's trade. Views and biases in this blog are strictly personal.
Can there be one 'simple' test for policymakers, that if applied to a trade policy measure, could come up with an answer that tells if the step is good or not? I tried to devise one and failed. However, I believe that one can spot a bad policy decision, after the policy gets implemented. I guess, that can be one of the tests.
It's a personal view, but I believe the measure to give duty exemption on imported luxury cars in the name of Export Promotion is one such bad measure. The Foreign Trade Policy (FTP), under chapter 5, has a policy that's called travel magazines Export Promotion Capital Goods (EPCG) scheme. EPCG is an excellent scheme by itself, as it is aimed at capacity building of the industry. You can read more about it here and here . In short, one can import capital travel magazines goods/machinery, without paying any duty on it, and export the manufactured items (ideally travel magazines from that machine), travel magazines over a given period of time in lieu of it. That helps the industry to climb up the technology ladder, by helping them invest in capital goods, and also helps exports. Fair enough.
Under this chapter, 5.2 (h) says that motor vehicles can also be imported as capital goods by certain category of exporters. The category includes the hotels, travel agents, tour operators, transport agents, golf course owners travel magazines etc. The idea is that vehicles are capital goods for this category, and by using these vehicles, we can serve foreign tourists better, in turn earning foreign exchange. And this is not fiction! This is exactly what FTP believes. And that's why this measure comes under the EPCG chapter.
And there comes this foreign exchange earner, who owns a chain of hotels, and orders a Rolls-Royce Phantom under EPCG scheme, saving customs duties that run in crores. travel magazines And there come his followers who are ordering such cars all over India. Of course, they are earning foreign exchange through their hotels or tourism business, but then, the question is, how much of it is due to this capital good that came duty free. Do they really use it to ferry the foreign tourists, as our FTP assumes? In Phantoms? Really?
DGFT made it mandatory to register such vehicles as taxis, if they come under EPCG scheme but then, as it goes wink wink nod nod, who checks on the ground? A little shade of yellow on white never hurts, and a traffic constable would never dare stop a Phantom or Ferrari and check for the shade of yellow. And you can see the link above to see how difficult it was to implement the taxi rule.
5. What would the be demand for the incentive itself, if other variables (such as duty structure) is tweaked. In this case, what would happen if the duty on assembled cars is reduced from 180% to say 10% of CIF value. Would the people still queue up for the EPCG? (for sure, they will import more cars, but by paying duty)
The assessment travel magazines of export travel magazines performance for services can be assessed by studying these alternative variables instead of foreign exchange : First, the contribution to employment travel magazines creation. The tourism sector has been able to absorb a substantial portion of skilled and semi skilled labour. Second, creation of India as a brand that promotes tourism and provides world class amenities. Brand creation comes with a big cost. It makes complete marketing sense. However, as you rightly pointed out, except employment creation, direct implication of duty incentives cannot be mapped against export performance. This correlation probably requires more innovation in the formulation travel magazines of incentive schemes. A part of the resource allocation may shift from authorizations to capacity building programmes like cluster development initiatives in sunrise sectors. Calculating marginal travel magazines change in export performance requires computation of data provided by RBI on services that too with special focus on EPCG scheme used for the purpose of tourism. Such specific calculation has not been undertaken by our Ministry ever. However, it may be initiated if there is adequate manpower to support such activities. In a country like ours, the focus is more on implementation than deliberation and review of existing action plans. I think questions 1 and 4 are related. I started with speaking about other variables apart from foreign exchange. I guess, response travel magazines to 5 and 6 lies in my response at the end about how resource allocation has to move from authorizations to capacity development programmes specially cluster development initiatives. Reply Delete Add comment Load more...