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BOP/3730 September 1964 TARIFFS and TRADE Limited Distribution

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BOP/3730 September 1964 TARIFFS and TRADE Limited Distribution RESTRICTED GENERAL AGREEMENT ON BOP/3730 September 1964 TARIFFS AND TRADE Limited Distribution Committee on Balance-of-Payments Restrictions Original: English 1964 CONSULTATION UNDER ARTICLE XVIII:12(b) WITH INDIA Basic Document for the Consultation¹ 1. Legal and administrative basis of the import restrictions The statutory authority on which current import controls are based is the Imports and Exports (Control) Act, 1947, which empowers the Central Government to issue Orders prohibiting, restricting or otherwise controlling, subject to any exceptions made by Order, the import of goods of any specified description. The procedure governirig the exercise of these powers are contained in the Import Control Order No. 17/55 of 7 December 1955, as amended from time to time, notified. under the Act cf 1947. Schedule I to this Order lists the goods for whose importation a licence or a customs clearance permit given by the competent authority is essential. The Order, however, exempts from this requirement imports for defence purposes, imports of government stores by the appropriate.Ministries and purchase organizations, passengers' baggage and personal effects, etc. The Order provides for the collection of application fees and specifies the conditions governing the grant of licences, their transfer, amendment, suspension and cancellation. Import control is administered by the Import and Export Trade Control Organisation of the Ministry, of Commerce. Besides its headquarters office in New Delhi, the organization has twelve regional Licensing offices in the different parts of the country. The organization is responsible for licensing imports of various goods, e.g. capital goods, however electrical plant and equipment, raw materials for different industries, etc. Licences for the importation of certain goods are, however, given by special authorities; iron and steel, by the Iron and Steel Controller, Calcutta; and certain machine tools by the Development Officer (Tools) of the Directcrate-General of Technical Development. The current import policy is for the whole year April 1964-March 1965 and all applications for import licences are made on a. yearly basis. Annual licences where granted will be subject to the condition that during the first. six months of the validity period of the licence, the license shall be entitled to order ¹Prepared by the Government of India. BOP/37 Page 2 shipment of the goods only to the extent of 50 per cent of the value of the licence and remittance only to the extent of 50 per cent will be allowed to him during the said period. The balance 50 per cent of the value of the licence can be utilized only after the commencement of the next half year and after endorsement by the licensing authority and will be subject to such change in value as may be decided upon by the Government. In other cases, licences will be issued for six-monthly entitlement/requirement as first instalment and supplementary licences covering next half-yearly entitlement/requirement will be issued in the next half year, subject to such cuts as may be decided upon having regard to foreign exchange availability and other factors. With a view to enabling the actual users both in the scheduled and non- scheduled sectors to utilize the small value annual licences up to Rs.5,000 in one lot immediately they are issued, such small value annual licences to actual users will be issued by the licensing authorities without imposition of the prescribed annual licensing conditions. For purposes of licensing, importers are grouped into three categories: (i) established imports, (ii) actual users, and (iii) others. Established importers are persons or firms who have been. actually engaged in import trade of the articles comprised in any serial number or sub-serial number, as the case may be, included in Schedule I to the Import Control Order 1955 (the import trade control schedules) during at least one financial year (1 April to 31 March) falling within the basic period specified for the said serial number or sub-serial number. The importers may choose the most favourable year from the basic period for the purpose of obtaining quota certificates. Actual users have been defined as those who require raw materials, accessories, machinery and spare parts, for their own use in an industrial manufacturing process. The items licensable to actual users are published annually in the import policy booklet. Licences to actual users are granted on the basic requirements assessed with reference to the level of production, past imports and stocks. The licences are not valid for import of raw material, etc. required for the manufacture of new items unless a licence for undertaking the new line of production has been obtained wherever necessary under the Industries (Development and Regulation) Act, 1951. Applications from scheduied industries borne on the books of the Directorate General of Technical Development are considered on the recommendations of the Directorate General of Technical Development. Applications from scheduled industries not borne on the books of the Directorate General of Technical Development and non-scheduled industries other than small-scale industries are considered on the recommendations of the prescribed certifying authorities. BOP/37 Page 5 Applications from small-scale industries for import of raw materials, machinery and equipment are considered on the basis of "essentiality" certified by the Directors of Industries of State Governments, the Textile Commissioner, Bombay, the State Drugs Control authorities or the State Directors of Handlooms. Other importers: wholesale and central stores recognized by the Government educational and research institutions etc. belong to this category. Import control procedures are set out in Public Notices published in the Official Gazette and in the yearly Red. Book entitled Import Trade Contrl Policy - for the Licensing Period - published by the Ministry of Commerce. The trading and business community is informed from time to time by statements of policy of the procedures to be followed and of the licensing policy in regard to particular commodities. 2. Methods used in restricting imports Imports under Open General Licences do not need individual licences. Open General Licences are in force for the import of free gifts of books, bona fide samples, blue prints and drawing relating, to machine and plant sites, and the free replacement of goods which have already been imported and have been found to be defective or unsuitable. All other imports have to be covered by individual licences. Individual licenses are issues (i) to established importers on the basis of quotas expressed as percentage of imports in a chosen base year, (ii) to actual users according to their current requirements and (iii) to other importers, on the recommendations of the sponsoring authorities. Export promotion: there are some items in which the inter-relationship between imports and exports is direct and intimate. The ability to export some of these manufactured goods depends largely on the facility with which the exporter or the manufacturer can procure the basic raw materials required in the manufacture. With a view to promoting the export of such goods, schemes have been devised for the grant of special import licence to replace the imported raw material content of the exported product, or to provide an inducement for larger exports. Specified kinds of raw material, machinery and equipment are licensed for importation under the scheme. Import licences under the Expert Promotion Scheme are normally issued against past experts already effected. Advance licences may, however, be issued even if there is no entitlement arising from past exports in case a firm order for expert, has been secured by the applicant. These Schemes are administered by the Export Promotion Councils or Commodity Boards or the Export Promotion Officers. An Import Licence granted under an Export Promotion Scheme will normally be valid for twelve months. BOP/37 Page 4 For purposes of import control, capital goods are understood to be such plant and machinery as are required for new installations, or replacements or for the expansion of existing projects or for setting up subsidiary production, whose aggregate value per unit is not less than Rs.100,000 (f.c.b) For purposes of carryifing out a planned programme of industrial development, it has been necessary to devise a special scheme for regulating the inflow of capital goods not manufactured in the country, in accordance with a scale of priorities which has been decided upon in the light of the industrial needs of the country, the supply potential of the internal market, and the availability of raw material and other relevant considerations. The import of capital goods has always been accorded high priority in the import programme. For a variety of other reasons also importation of capital goods has to be regulated. Firstly, because the uncontrolled and sporadic imports of heavy plants may lead to an industrial disequilibrium and generate heavy demand fcr importing industrial raw material. Secondly, both on grounds of essentiality and the need. to save foreign exchange, import of machinery which are available from indigenous sources have to be discouraged. Accordingly applications for import licences are required to be scrutinized by a capital gocds committee on whose recommendation licences are granted. As a general rule, applications for import licences for substantial values of plant and machinery which are
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