Govt allows agri EOUs to share capital goods

NEW DELHI: In a bid to boost farm exports, the government has allowed export-oriented units in the agriculture and horticulture sectors to share capital goods like micro-irrigation equipment with contract farmers. Such units can also share capital goods with each other and this decision is likely to assist promotion of agri export zones (AEZs). Usually, the government does not allow shifting of capital goods, which are imported duty-free for export, from the production unit of the EOU which owns the equipment. The relaxation has been provided to farm-sector EOUs since micro irrigation items are used in the field rather than the production unit, Director General of Foreign Trade (DGFT) NL Lakhanpal told ET . Use of such equipment, imported duty free under bond, has been permitted on condition the farm produce is processed at the EOU and exported, he added. Notifications to this effect have been issued by the finance ministry as well as the DGFT. The rules governing duty-free import of goods by farm-sector EOUs has been amended. The flexibility will be available to capital goods procured from the domestic market without paying duty. The government has also allowed four more AEZs, two each in Sikkim and Karnataka. The mango pulp and fresh vegetables AEZ in Andhra Pradesh has been extended to cover all of Chitoor district as compared with only 13 mandals earlier. One AEZ in Sikkim is for export of orchids and cherry pepper while the other is for ginger. One of the two new zones in Karnataka is for flowers while the other is for rose onion. With the addition of these four AEZs, the number of zones set up by the government has risen to 28. Lakhanpal said the apprehensions of exporters have been allayed on the sub-contracting issue, with both the finance ministry and the DGFT issuing notifications to permit transfer of raw materials. This will benefit EOUs, units located in special economic zones and export processing zones. In fact, SEZs can now send finished goods from job workersâ€™ premises directly to the port for export, provided the sub-contractor is registered with the excise department. The export documents have to be in the name of the SEZ unit concerned while goods can move directly to the port after finishing work at the premises of a unit carrying our job work. R Veeramani, president of the Confederation of Export Units, said the relaxation in policy will accelerate growth in exports. It is not enough if India seeks to SEZs on the Chinese model but the rules have to as simple as in the Chinese SEZs, he added. On the basis of recommendations from the revenue department, the government had banned sub-contracting except in the case of job workers registered with the excise authorities. Following numerous complaints from the export community, the commerce and finance ministries reconsidered the issue and relaxed the norms. Various organisations, including the Federation of Indian Export Organisations (FIEO), had called for reversal of the bar on sub-contracting. While accepting the exporters demand on job work, the government has not accepted the demand of exporters for claiming deemed export benefits in case a supplier from the domestic tariff area decided to pass on the benefit. On the basis of a disclaimer from the DTA supplier, EOUs were availing the benefit earlier. This facility has been scrapped now since the revenue department wants the benefits to be claimed by those who are actually entitled. Officials of the finance ministry feel this will help in checking loss of revenue.

Govt allows agri EOUs to share capital goods

In a bid to boost farm exports, the government has allowed export-oriented units in the agriculture and horticulture sectors to share capital goods like micro-irrigation equipment with contract farmers.

More from our Partners

Popular Categories

Hot on Web

In Case you missed it

Top Searched Companies

Latest News

Download ET APP

Follow us on

become a member