Policy for Import Growth

Policy for Import Growth THOUGH the Import and Export Policy for the next three-year period, 1990-93, announced at the end of last month lists as many as five. 'principal objectives and pays ritual homage to the goal of promoting 'self-reliance', it is clear that the predominant objective by far is "to encourage rapid and sustained export growth". However, over the years the means adopted by the government to encourage exports have been such that the major outcome of the new import-export policy's concern with promoting exports will be to further ease access to imports not only for exporters but, more importantly, for those catering to the domestic market as well. One of the principal instruments of export promotion is the so-called Import Replenishment (or REP) Licensing Scheme, While the scheme is supposed to replenish the raw materials and components used in the manufacture of exported products, the term 'replenishment' is very definitely a misnomer because there are other liberal provisions for meeting the actual import requirements of exporters and the REP licences and imports against these licences are intended to be transferred, at a premium, to those producing for the domestic market. Tbgether with the straightforward cash compensatory support (the cost of which to the exchequer is put at Rs 2,089 crore in 1989-90) and the total exemption from taxation of income from exports, the premium on REP licences is one of the principal ways in which exports are currently subsidised.