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ELCINA Electronic Industries Association of India (Formerly Electronic Component Industries Association) was established in 1967 when India's Electronic industry was still in its infancy. ELCINA has always remained committed to the promotion of electronics manufacturing culture in the country focusing on components-the building blocks of electronics industry.

  • GST may not keep date with April next year : The Centre may delay the rollout of the unified goods and services tax (GST) by at least a year, with many State governments raising reservations about the feasibility of the April 01, 2010 deadline. It is contemplating a new road map for rolling out GST, which is aimed at unifying the fragmented Indian market by getting rid of multiple state-specific levies and differences in tax rates. The Centre will take a final decision on having new timelines in consultation with the empowered committee of State Finance Ministers.
  • Notifications:
    • No.71 & 72/2009-Customs, both dt. 19th June/09 : Regarding Safeguard Duty on Aluminium Flat Rolled Products and Aluminium Foil. Notification No.72 rescinds the earlier notification No.26/2009-Customs dt. 23.3.2009.
    • No.112(RE-2008)/2004-2009 dt.16th June/09 (by DGFT) : Prohibiting import of Mobile Handsets (classified under EXIM Code ‘8517’) without International Mobile Equipment Identify (IMEI) No. or with all Zeroes IMEI with immediate effect.
  • Import of mobiles without IMEI banned : In a significant development, through a notification issued by DGFT, India has banned the import of mobile handsets without IMEI (International Mobile Equipment Identity), a unique identification number. Mobile phones without IMEI are considered a security threat as it is difficult to track handsets without this number. This concern was raised after terrorist attacks like the one in Mumbai in November last year. The Department of Telecommunications had earlier asked telecom operators to disconnect services to such handset but they were reluctant to do so. IMEI is a 15-digit code which appears on the operator's network whenever a call is made. There are about 25 million Chinese handsets that are being used in the country.
  • General Budget on July 06, 2009 : The Budget Session of Parliament will start on July 02 with the tabling of Economic Survey. The Railway Budget will be presented on July 03 and the General Budget for 2009-10 will be presented to the Lok Sabha on July 06, 2009. The schedule for the Budget session was decided at a meeting of the Union Cabinet on Monday.
  • Finance Ministry mulls re-entry of investment allowance : An intense debate is taking place within the Finance Ministry over a proposal to reintroduce investment allowance for companies implementing new projects or creating productive assets to expand their businesses. Within the ministry, there are strong views against and in favour of the proposal. But the fact that the ministry has informally sought clarifications from industry on the matter is a sign that the proposal is under consideration. Investment allowance for expenditure incurred by industry on plant and machinery stood withdrawn with effect from April 1990. Till then Indian companies could claim a deducation of an amount equal to 20% of the cost of plant and machinery installed or put to use while computing their profits from business,
  • Notifications:
    • Customs Notification No.58/2009 dt. 5th June, 2009 : Imposing definitive anti-dumping duties on imports of Compact Discs-Recordable (CD-Rs), originating in or exported from Iran, Malaysia, Korea ROK, Thailand, UAMes and Vietnam
  • Govt plans to formulate new rules for de-notification of SEZs : The government is looking into formulating new rules for de-notification of special economic zones (SEZs) in the wake of several developers, including realty major DLF, approaching the Commerce Ministry for surrendering their tax-free enclaves. According to the Department of Revenue, there is no such provision in SEZ scheme for de-notification of SEZ even if the developer has undertaken to pay back of duty benefit taken and that BoA (Board of Approval, which took up the request of DLF for re-notification) may like to decide the issue accordingly. However, the Ministry of Law opined that though there is no specific provision in the SEZ Act and Rules, the power to notify includes power to de-notify also.
  • Notifications:
    • Notification dated 29th May 2009 : Through this notification, the DG Safeguards has excluded Aluminium Foils of stringent specifications like "thickness less than 7 microns" and "foils of 10.5 microns with rough surface" from the Safeguard Duty, giving relief to manufacturers of Capacitors using formed & etched aluminium foils. Corresponding notification is yet to be issued by the Finance Ministry.
  • Taxes worth Rs.910 crore in Maharashtra Budget : In the Maharashtra Budget for 2009-10 presented by the State Finance Minister Dilip Warse Patil on 4th June, 2009, Value-added tax (VAT) on mobile phones, cordless phones, video phones, video and digital cameras has been increased from 4% to 12.5%. VAT on selected items used in space and satellite industry was reduced from 12.5% to 4%, while Solar energy equipment exempted from VAT and CFLs to attract VAT at 4%.
  • Anti-dumping duty on CFL : Through Notification No.55/2009-customs dated 26th May, 2009, the government has imposed on anti-dumping duty of $0.36-1.90 per piece on the import of Compact Fluorescent Lamps (CFL), with or without ballast or control gear or choke, whether or not assembled, either in completely knocked down or semi-knocked down condition (hereinafter referred to as the subject goods), falling under heading 8539 of the First Schedule to the Customs Tariff Act, 1975 (51 of 19785), originating in, or exported from China PR, Sri Lanka and Vietnam.
  • MVNO entry cleared by telecom panel : The Telecom Commission, the policy making arm of the Department of Telecommunications (DoT), has cleared the entry of Mobile Virtual Network Operators (MVNO) in the country. The move will be a big boost for consumers, who should get more choice of services and could see a further fall in rates in market which already has eight to 10 operators. MVNOs do not own spectrum. They operate through commercial arrangements with licensed mobile network operators, by purchasing bulk minutes of traffic and reselling these to their own subscribers under their own brand name. Globally, there are many known brands like Virgin Mobile, ESPN, STAR TV, MTV and Disney kin the MVNO space. They offer niche services to customers based on their expertise. Telecom operators say they expect at least four to five MVNOs to enter the country.
  • Govt relaxes rules on used capital goods in SEZs : The Commerce and Industry Ministry has relaxed rules governing used capital goods in special economic zones (SEZs) with certain riders. The move will help the infotech sector, as many software companies are planning to generate more business from SEZs, as tax benefits under other areas - STPI and EoUs - are coming to an end in March 2010. Under new rules issued last week, both the developer and units operating within the SEZ can bring capital goods worth more than 20% of total capital investment. But, while doing that, the companies will have to forgo the income tax benefits, which are spread in different tranches for 15 years.
  • Notifications:
    • Notification No.55/2009-Customs dt. 26th May, 2009 : Imposing anti-dumping duty on CFL for import from China, Sri Lanka and Vietnam
    • Customs Circular No.17/2009 dt. 25th May, 2009 : Norms for execution of Bank Guarantee under specified export promotion schemes - Modification in Circular No.58/04-Cus dt.21.10.04-reg.
  • Full duty refund to exporters : The government has decided to extend full rate of duty refunds, including excise, to merchant exporters, who purchased goods from the local markets for overseas shipments. The Central Board of Excise & Customs (CBEC) said in a circular (No.16/2009-Customs dated 25th May/09) that the exporters seeking full duty drawback will have to submit the proof with the customs authorities that they have procured goods from the local markets. The decision has been taken on the basis of the recommendations of the Drawback Committee.
  • E-stamps to simplify doing business in India : The Ministry of Corporate Affairs (MCA) is planning to introduce E-stamps in lieu of the current stamp paper. Once implemented, it will become simpler for companies to pay the stamp duty electronically, leading them to save on time and effort of going to the concerned office to buy stamps. It will also reduce the service delivery time by eliminating the need to deliver the papers to Registrar of Companies. In order to remove the hurdle in making the system entirely paperless, MCA has though of introducing E-stamps that would be available at the MCA-21 portal. The MCA-21 is an e-governance mode for companies that come under the Companies Act, 1956 which is intended to facilitate online filing and access to corporate data on round the clock basis. The Ministry would put plan in place in the next three months.
  • Notifications:
    • Circular No.16/2009-Customs dt. 25th May, 2009 : Regarding grant of All Industry Rate of Duty Drawback to merchant exporters.
    • Customs Notification No.50/2009 dt. 15th May/09 : Specifying anti-dumping duties on import of Cathode Ray Colour Television Picture Tubes from different countries.
  • SEZ export profits likely to get full I-T exemption : The three-year long wait of companies to avail full income tax exemption on export profits from their SEZ units may come to an end in two months. According to official sources, the government has firmed up plans to bring changes in Section 10AA of the Income Tax Act in the forthcoming Union Budget to rectify an anomaly in the wording of the Section that adversely affected SEZ units. The decision is seen as a stimulus measure to boost investments in SEZ. This move will benefit IT/ITeS sector as it account for most of the SEZ projects. As per Section 10AA, for calculation of exemption from income tax on export profit, 'export turnover of the unit' is divided by the 'total turnover of the assessee'. But in many cases the assessee has units outside the SEZ too. Industry says 'total export turnover of an SEZ unit' should be divided only by the 'total turnover of the SEZ unit' and not by the 'total turnover of the assessee company'.
  • CST to phase out with GST entry : In a significant departure from its original plans, the Centre and States have decided not to reduce the Central Sales Tax (CST) rate in 2009-10. Instead, the tax will be completely withdrawn once the proposed Goods and Services Tax (GST) is introduced. As part of the implementation of VAT and introduction of GST in the country, the Centre and the States had agreed to phase out CST through a 1% annual rate cut starting April 1, 2007, over a period of four years. It was scheduled to be completely abolished by 2010-11. The government had decided to introduce dual GST regime in the country, starting April 2010. But to finalise the crucial issue of the rate at which the tax will be levied, the Empowered Committee of the State Finance Ministers has now set up three sub-committees to work out the modalities of the tax. One of the sub-committees has been asked to working out revenue neutral rates for GST. The second panel is to finalise the list of exempt commodities under the proposed tax and the third committee will review the phase-out of CST.
  • Notifications:
    • Circular No.114/08/2009-ST and Notification No.15/2009-Service Tax, both dated 20th May, 2009 : Regarding refund of service tax paid on taxable services provided in relation to the authorized operation in a Special Economic Zone (SEZ).
  • DOT notifies mobile number portability : Come September, cellphone users in some parts of the country, including the four metros of Delhi, Mumbai, Kolkata and Chennai, will have the facility to switch operators even while retaining their existing number. The Department of Telecommunications has issued a notification in this regard say, "Mobile Number Portability is to be implemented in Delhi, Mumbai, Maharashtra and Gujarat Service areas of Zone 1 and Kolkata, Tamil Nadu, Chennai, Andhra and Karnataka of Zone 2 within six months of award of licence by September 20, 2009, and in the rest of the country by March 20, 2010.
  • Notifications:
    • Circular No.14/2009-Customs dt. 6th May, 2009 : Regarding implementation of Phytosanitary requirements in import or export of goods.
    • Policy Circular No.84(RE-2008)/2004-09 dt. 30th April/09 : Terms and conditions for issue of EPCG authorizations to EOU units after conversion to DTA unit.
    • Notification No.SO.563(E) dt. 27th Feb/09 (issued by Department of Industrial Policy & Promotion) : Rescinding of earlier Notification No.S.O.857(E) dt. 10.12.1997, which specified the basis on which an industrial undertaking was regarded as a Small Scale or an ancillary Industrial undertaking. This, inter alia, provided the basis on which a Small Scale or an ancillary Industrial undertaking was considered as a subsidiary of or owned or controlled by any other industrial undertaking.
  • RBI’s special interest rate for exporters till Oct 31, 2009 : Providing relief to exporters hit by shrinking global demand, the Reserve Bank of India on 28th April/09 extended the concessional interest rate scheme by six months till 31st October, 2009. The ceiling on interest rate on pre-shipment rupee export credit up to 270 days and post-shipment credit up to 180 days at BPLR minus 2.5% was to expire on April 30, 2009. In a circular to the scheduled commercial banks extending the validity up to 31st Oct, RBI said that since these are ceiling rates, banks would not be able to charge exporters interest rates above the benchmark prime lending rate (BPLR) minus 2.5%.
  • Airwaves may be auctioned to all Telcos; Subscriber-based Allocation System may go : India could move to an internationally-accepted auction-based system for issuing additional radio spectrum to existing mobile operators, abandoning a controversial practice of allocating the scarce national resource based on companies' subscriber number. A committee set up by the government last year to resolve the vexed issue of additional spectrum allocation is coming around to a consensus view that an auction-based system has much greater merit than the present practice. The Committee, which includes representatives from the government, regulator TRAI, telecom technology experts and industry officials, is expected to submit its report to the Communications Ministry next month, and its recommendations are most likely to be adopted as policy by the new government after electrions. India is the only country that allocates spectrum based on subscriber numbers, and the practice has led to charges that several Indian mobile operators inflate subscriber numbers to corner the resource. Currently, operators using the dominant GSM technology get 6.2 MHz of spectrum each while those using the rival CDMA standard get 5 MHz each. GSM operators can have a maximumof 15 MHz spectrum while for CDMA players, the limit is 7.5 MHz. India's fast-growing mobile industry led by Bharti Airtel, Vodafone Essar and Reliance Communications has more than 400 million subscribers now, and getting additional spectrum at regular intervals is crucial for them to expand operations. Besides, having more spectrum can also lower capital expenditure by more than 40%. According to the Committee, subscriber figures would not be completely disregarded under the auction system that the Panel planned to propose, but they would not be the sole determinant.
  • RBI cuts short-term rates : The Reserve Bank of India (RBI) has acknowledged that GDP growth for 2009-10 would be a disappointing 6% unless banks substantially increase their lending to industry and the retail sector. For this, banks need to reduce interest rates on loans. In RBI's annual policy statement announced on 21st April/09, Governor D. Subbarao therefore slashed by 25 basis points the repo (the rate at which banks borrow from RBI) to 4.75% and reverse repo (the rate at which they park funds with RBI) to 3.25% with immediate effect.
  • Trade Policy to be aligned with GST after April 01, 2010, New FTP likely by mid-2009 : The new Foreign Trade Policy (FTP), which is being prepared by the Commerce Ministry, will be aligned with the Goods and Services Tax (GST) only after implementation of this indirect tax mechanism. The new Policy is likely to be announced by the next government at the Centre by mid-2009, while the GST is likely to be implemented from April 01, 2010. The current FTP of 2004-09 was unveiled by the United Progressive Alliance government on September 01, 2004 and was to expire on March 31, 2009. However, the Directorate General of Foreign Trade (DGFT) under the Commerce Ministry had extended its tenture till a new policy was ready.
  • Notifications:
    • Policy Circular No.80(RE-2008)/2004-2009 dt. 13.4.2009 : Clarification regarding extension of Export Obligation Period (EOP) against Advance Authorisation. Through this Policy Circular, it has been clarified by DGFT that the facility shall be available to all advance authorizations which are within 36 months from the date of issuance of the authorization, as on 26th Feb. 2009 or thereafter. However, in cases wherein composition fee has already been deposited to Regional Authorities prior to 26th Feb/09 for EOP extension in terms of earlier provision of paragraph 4.22 related to EOP extension, no refund of the composition fee so deposted shall be allowed.
  • Finance Panel sees 16% GST as basis for future talks : A further rejig in service tax and excise duty rates may be on the cards after the upcoming general elections to pave the way for the proposed Goods & Services Tax (GST). According to a study commissioned by the 13th Finance Commission, a revenue-neutral rate for GST would be just over 16%. As part of its mandate, the 13th Finance Commission is reviewing the planned structure of GST to assess its impact on the Centre and States’ tax kitty. It will come out with a new basis for devolution of taxes between the two. Mr. Vijay Kelkar, one of the key architects of GST in India, heads the commission. GST will subsume service tax and excise duty, along with a plethora of state-level taxes and duties, and is scheduled for introduction from April 01, 2010.
  • Cash withdrawal tax scrapped from 1.4.2009 : Taxpayers will not have to pay levy on the withdrawal of cash from banks, with the government withdrawing the Banking Cash Transaction Tax from 1.4.2009, as per announcement in the Union Budget 2008-09.
  • Notifications:
    • Public Notice No.167(RE-2008)/2004-2009 dt. 30th March, 2009 : Adding a new paragraph 2.20A (after para 2.20 in the Handbook of Procedures) related to “Execution of Bank Guarantee/Legal Undertaking for DEPB/Freely transferable Incentive Schemes under Chapteer 3”, as follows: “At the time of filing application for scrip(s) under DEPB Scheme/Freely transferable incentive Scheme under Chapter 3 of FTP without Bank Realisation Certificate (BRC), the applicant shall executve BG/LUT (as per customs circular no.58/2004) with the RA as per Appendix 25C or Appendix 25D respectivey”
    • Policy Circular No.76(RE-2008)/2004-2009 dt. 30th March, 2009 : Regarding guidelines for execution of BG/LUT with Regional Authorities for filing application under DEPB scheme and incentive schemes of Chapter 3 of FTP without the requirement of Bank Realisation Certificate..
    • Public Notice No.164(RE-2008)/2004-2009 dt. 25th March, 2009 : Through this Public Notice, para 5.4 of HBP (Vol.I) 2004-2009, updated as on 11-4-2009, has been amended as under:- “An EOU/a relocated SEZ unit, while converting to a DTA unit, may apply for an EPCG authorization in ANF along with documents prescribed therein. ‘No Objection Certificate’ should be produced from concerned Development Commissioner”.
    • Policy Circular No.72(RE-08)/2004-2009 dt. 24th March, 2009 : Doubts had arisen on the issue of allowing alternative inputs as per SION under DFIA scheme, even if the input mentioned in the SION, has not been specifically utilized in the manufacture of the exported product. According to the subject Policy Circular, the government has examined the matter in detail and clarified that since the objective of SION is to allow duty free import of inputs which are actually used or are capable of being used in the export product, the exporter has the flexibility to import the alternative input/product mentioned in the SION.
  • No Fin Min nod needed for export obligation waiver : The Commerce Ministry has deleted a provision dealing with export obligation waiver that required a final say by its finance counterpart. Instead, it will use another provision in the current trade policy that allows it to grant waiver on its own. The paragraph that was deleted through a DGFT notification recently, allowed exporters to request waiver of export obligation, in case they were impacted by force majeure like natural calamities, fir or other extraordinary events beyond anyone’s control. Exporters have to commit certain value of exports within a specified period time while subscribing to various export promotion measures like the Export Promotion Capital Goods (EPCG). The waiver applications in cases of force majeure conditions can now be taken up by DGFT as the foreign trade policy allows the Directorate to provide relief in cases where the exporter faces “genuine hardship” and “adverse impact of trade”.
  • Government holds back cut in telecom licence fee : The government has called off its decision to slash the licence fee for telecom operators with large network presence by up to a third from April 01, 2009, following opposition from the Finance Ministry, giving a Rs.2,000-crore blow to the industry. Last year, DOT had announced a cut in the fee contributed towards Universal Service Obligation Fund from 5% to 3%. At present, telcos pay 6%, 8% and 10% (based on the ranking of their circles) of their AGR as licence fee.
  • Notifications:
    • Notification No.31/2009-Customs dt. 27th March, 2009 : Imposing anti-dumping duty on Colour Picture Tubes from Indogensia.
    • Notification No.26/2009-Customs dt. 23rd March, 2009 : Imposing Safeguard Duty on Aluminium Products
    • Notification No.95(RE-2008)/2004-09 dt. 13th March, 2009 : Adding the following in para 6.7 in Foreign Trade Policy: “(d) Applications for conversion into an EOU/EHTP/STP/BTP unit from existing DTA units, having an investment of Rs.50 crores and above in plant and machinery or exporting Rs.50 crores and above annually, shall be placed before BoA for a decision”.
  • Relief for export units as CBDT untangles tax net : The Central Board of Direct Taxes (CBDT) has instructed income-tax officials to allow export-oriented units (EoUs) approved by development commissioners to claim tax exemption, ending the uncertainty over tax benefits to EoUs. CBDT in its communication to Income Tax authorities has conveyed its decision that an approval granted by the development commissioner in the case of an EoU set up in an export processing zone will be considered valid, once such an approval is ratified by the Board of Approvals (BoA) for EoU scheme.
  • Govt issues clarification on tax refund for exporters : The government has clarified that exporters will not get service tax refund on services consumed for export of goods before October 06, 2007. Commerce Minister Kamal Nath had announced the refund during the release of the annual supplement to the Foreign Trade Policy in April, 2007. However, the notification in this regard was issued only on October 06, 2007. According to the clarification issued by CBEC on 12th March, 2009, being prospective in nature, refund is not admissible on such services received prior to the date they are notified in the said notification, even if the goods, in relation to which these services are used, are exported after the date when such services are notified under notification No.41/2007-ST.
  • Regulator cuts receiving charges between operators : In a move that might cost the incumbent telecom operators hundreds of crores but benefit new operators, the Telecom Regulatory Authority of India (TRAI) on 9th March/09 reduced termination charge for all types of domestic calls from 30 to 20 paise a minute. Termination charges are paid by one operator to another on whose network the call ends. According to Industry sources, the annual net cost of termination charges is estimated at Rs.2,000 crore.
  • RBI surprises market with repo, reverse repo rate cuts : Less than a week after third-quarter GDP estimates showed a lower-than-xpected 5.3% growth rate, the Reserve Bank of India on 4th March, 2009 surprised the market and sent fresh signals to banks to lower lending and deposit rates by pruning the repo rate and the reverse repo rate by 50 basis points each. The repo rate, or the rate at which RBI lends to banks, has been cut to 5%, while the reverse repo rate, at which the central bank absorbs liquidity, has been pared to 3.5%. The market had given up hopes of an immediate reduction after the central bank prodded banks last week to lower rates.
  • SEZs to get tax refunds on input services : According to a change in rules notified by the government, Developers of special economic zones (SEZ) and units inside such zones can from now on claim refunds of taxes paid on all input services, regardless of whether the services are used inside or outside the tax-free zones. The new rules means that developers and units inside SEZs will now have to first pay a tax on the services consumed and then claim a refund from the tax authorities. The refund can be claimed within six months from the date of payment of taxes. Until now, the government had exempted deverlopers from paying a tax on services used inside the zones while services used outside them attracted taxes, notably a 10% service tax on items such as courtier and transport services. The move could help finances of SEZ deverlopers and companies operating inside SEZs.
  • Notifications:
    • Customs Circular No.11/2009 dt. 25th Feb/09 : Duty Free Import Authorisation (DFIA) Scheme - availment of facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002 or Cenvat credit under CENVAT Credit Rules, 2004 under Notification No.40/06-Cus dt. 1.5.06.
    • Customs Circular No.10/2009 dt. 25th Feb/09 : Certification of Invoices for supply of goods from DTA to EOUs for claiming Deemed Export benefits.
    • Public Notice No.151(RE-2008)/2004-09 dt. 26th Feb/09 : Changes/amendments made through the interim Foreign Trade Policy.
    • Notification No.88/2009 dt. 26th Feb/09 : Various amendments announced through the interim Foreign Trade Policy.
    • Press Note No.4(2009 Series) dt. 25th Feb/09 : Clarificatory guidelines on downstream investment by Indian companies.
  • Commerce Minister announces interim Foreign Trade Policy : The interim Foreign Trade Policy announced by the Commerce & Industry Minister Kamal Nath on 26th February, 2009 contained several measures to boost the country’s exports, but fell woefully short of expectations of the recession-hit exporting community. The policy, which addressed the tight credit situation and slowdown in demand faced by exporters, came up with sector specific incentives restricted to leather and textile sector. It eased trade restrictions on the gems & jewellery industry and relaxed export obligations
  • Government unveils fiscal stimulus III : The Finance Minister Pranab Mukherjee announced on 24th Feb/09, another stimulus package for economy, the third this financial year, cutting excise duty and service tax two percentage points each, effective midnight, and extending previous excise cuts beyond March 31, 2009. Service tax has been cut across the board from 12% to 10% and the excise has been reduced by the same margin only for items that currently attract the 10 per cent rate. This package will cost the exchequer Rs.30,000 crore.
  • IT Ministry for extending STPI sops till 2015 : Talking on the sidelines of ‘Indiasoft 2009’ organized by ESC at Kolkata recently, Shri Jainder Singh, DIT Secretary, said that the Union IT Ministry is keen on extending the tax benefits to STPI by another five years till 2015. DIT has already taken up the matter with the Finance Ministry.
  • Notifications:
    • Customs Notification No.14/2009 dt. 19th February, 2009. Exempting goods when imported into India against a duty credit scrip issued under the Hi-tech Product Export Promotion Scheme in accordance with paragraph 3.11 of the FTP. The benefit under this notification shall be available only in respect of duty credit scrip issued against export of the products specified in the Table annexed to the notification. Such products include Public Call Office, SIM Cards, Memory Cards, Cellular Phones, Hybrid Integrated Circuits, Solar Cells/Photovoltaic Cells etc.
    • Press Note No.2(2009) dt. 13th February, 2009 : Guidelines for calculation of total Foreign Investment i..e. Director and Indirect Foreign Investment in companies.
    • Notifications No.S.O. 199(E) & S.O.200(E) dt. 16th January, 2009. Issued by the Ministry of Micro, Small and Medium Enterprises, amending the Notification No.S.O.1642(E) dt. 29th Sept/06, wherein the format of Entrepreneurs’ Memorandum (EM) had been notified.
  • Highlights of Interim Budget 2009-10 : An Interim Budget for 2009-10 presented by the acting Finance Minister Shri Pranab Mukherjee on 16th Feb, 2009, was more like a Vote on Account without any initiative to promote economic activity to address the recessionary climate. It appears our economic mandarins are of the view that enough has already been done through two stimulus packages to insulate India. The Finance Minister largely highlighted the achievements of the UPA Government during the last 5 years. He did give a clear message that the coning financial year would witness slower growth than the years gone by and there would be significant rise in Fiscal and Current account deficits due to falling tax collections and greater outlays on social sector spending.
    • The Gross Domestic Product recorded a sustained growth of over 9 per cent for three consecutive years for the first time with agriculture, services, manufacturing along with trade and construction as growth drivers.
    • Fiscal deficit down from 4.5 per cent in 2003-04 to 2.7 per cent in 2007-08 and Revenue deficit from 3.6 per cent to 1.1 per cent in 2007-08.
    • While manufacturing sector recorded growth of 9.5 per cent per annum in the period 2004-05 to 2007-08, communication and construction sectors grew at the rate of 26 per cent and 13.5 per cent per annum, respectively.
    • Exports grew at an annual average growth rate of 26.4 per cent in US dollar terms in the period 2004-05 to 2007-08. Foreign trade increased from 23.7 per cent of GDP in 2003-04 to 35.5 per cent in 2007-08.
  • Notifications:
    • Customs Circular No.6/2009 dt. 9th Feb, 2009 : Regarding procedure to be adopted for refund of 4% Special Additional Duty of Customs in pursuance of Notification No.102/2007-Custom dt. 14.9.2007. As per para 7.3 of the 2007 circular, it was clarified that in case of 4% CVD having been paid through DEPB Scrip, the amount eligible for refund should be re-credited on the relevant DEPB Scrip. Through the latest circular, the Finance Ministry has decided to extend the same facility to VKGUY, FPS and FMS Scrips also.
  • Norms for indirect FDI eased : As part of its effort to rejuvenate moribund capital inflows, the government on 11th Feb/09 rationalised indirect FDI norms for sectors that have caps. The move would enable foreign entities to hold higher stakes in joint ventures with firms owned and controlled by Indians that may also have an FDI component. Under the new norms approved by the Cabinet Committee on Economic Affairs, direct investments by NRIs would now be considered FDI, while funds routed through an entity owned or controlled by a resident Indian or an Indian company would be considered domestic investment. According to Home Minister, P. Chidambaram, the new guidelines would simplify, streamline and rationlise the methodology of calculating indirect foreign investment across sectors leading to investor-friendly, credible and predictable regulations. Sectors like Telecom, Aviation, Retial, Defence, Insurance are expected to significantly benefit from this initiative.
  • April may not see 1% cut in CST : Uncertainty looms large over 1% cut in central sales tax (CST) from April 1, 2009. The Finance Ministry is examining whether to go in for the reduction this year or eliminate it altogether when the goods and service tax (GST) rolls out in 2010.
  • Drawback benefits for supplies from DTA to SEZ developers : Supply of goods from domestic tariff area (DTA) to special economic zone (SEZ) developers will now be entitled for duty drawback benefits even if the payments for such supplies are made in Indian Rupees. The Commerce Ministry on 3rd Feb/09 amended the existing SEZ rules to allow this benefit. Prior to this change, the duty drawback benefit was allowed only against the payments made in foreign currency. The latest move would increase manufacturing activities in the country, and will specifically help domestic manufacturers to become more competitive against international prices.
  • Commerce Ministry mulls 3-yr extension of EoU tax breaks : At the annual award function of Export Promotion Council for EoUs and Special Economic Zone (EPCES) in New Delhi on 3rd Feb/09, the Union Commerce Minister Kamal Nath said that the Commerce Ministry has proposed a 3-year extention of tax benefits given to EoUs in an attempt to encourage export industries at a time when global demand is expected to slump further. The move, if implemented, will benefit more than 2,700 companies operating within the EoUs. Under Section 10(B) of the Income Tax Ac, EoUs do not need to pay tax on profits provided they fulfil some conditions, including exporting not less than 50% of their total production. This benefit is to expire at the end of next fiscal 2990-10.
  • Telecom Commission okays long distance calling cards : Charges for long distance calls - both domestic and international - may go down as the Telecom Commission, the policy-making arm of the Department of Telecommunications (DoT), approved on 2nd Feb/09 the provision for calling cards by long distance operators. Consumers will, therefore, have the option to make long-distance calls through the mobile operators of their choice. TRAI, in its recommendations, had opened the market for private players to provide call cards for domestic and international calls. The move will benefit 23 domestic and 18 international long distance service providers in the country.
  • GST may give $15-bn push to economy : According to Vijay Kelkar, Chairman of the 13th Finance Commission, the Goods and Services Tax (GST), proposed to be introduced from April 2010, would benefit the economy by at least $15 billion (about Rs.73,000 crore) per year as the effective tax rate is expected to drop significantly. Kelkar feels a fall in tax incidence on goods and services offered will enable the producers to sell their products at a lower price, leading to increased demand.
  • Notifications:
    • Customs Circular No.4/2009 dt.28th Jan/09 : Clarifications in respect of quantum of Bond and Bank Guarantee (BG) under Advance Authorisation and Export Promotion Capital Goods Schemes.
    • Customs Notification No.8/2009 dt. 22nd Jan/09 : Imposing anti-dumping duty on import of digital versatile discs-recordable generally known as DVD-R and DVD-RW from China, Hong Kong and Chinese Taipei
    • Policy Circular No.56(RE-2008)/2004-2009 dt. 21st Jan/09 : Claim of freely transferability duty credit scrip benefits under Chapter 3 of FTP, clarification regarding eligibility of exports by EOU thereunder.
  • Semiconductor Policy brings in 17 projects : Seventeen projects amounting to an investment of $31 billion (Rs 1,57,000 crore) have been received by the Government under the Semiconductor Policy, according to Mr A. Raja, Union Minister of Communications and Information Technology. The policy provides special incentives in the form of capital subsidy of 20 per cent for units in special economic zone and 25 per cent for units outside the SEZ on the investment. The proposals received include investments in semiconductor wafer fabrication, TFT-LCD panel and solar photovoltaic. “I urge all NRIs to take advantage of this scheme [the policy] by bringing investment in the country and help India in leapfrogging in the field of manufacturing of IT hardware,” he said at the Pravasi Bharatiya Divas Convention 2009. Though Indian companies like Infosys, Tata Consultancy Services and Wipro have made waves in the IT sector, there is a lacuna in manufacturing of IT hardware. To encourage investment in the IT sector, the Government announced the Semiconductor Policy in 2007. Mr Raja said though the country was able to achieve growth in voice communication, another area that has a huge growth potential to propel the country to the next level of connectivity – from voice to data – is the expansion of broadband. Broadband connections have doubled in the last year to reach 5 million, representing a model 0.5 per cent. The target is to achieve 20 million by 2010. The Minister urged NRIs to participate and share growth in this area and help in transforming the masses of the country into educated and informed people.
  • RBI maintains status quo on rates, 7% growth seen : The Reserve Bank of India, in its third quarter review on Monetary Policy announced on 27th January, 2009, kept policy rates unchanged, but put the onus of further reduction in interest rates on banks. RBI Governor D. Subbarao’s 35-page statement on the review repeastedly touched upon the scope for further rate cuts by banks and said that the full impact of the measures announced by the central bank in the last four months will be felt over the next few days. In its review, RBI lowered growth projection for the current financial year to 7%, with a downward bias, from 7.5-8%, in view of the global economic downturn.
  • Rs.62,000-crore plan to give boost to MSMEs : The government is working out a Rs.62,000-crore financial plan for the micro, small and medium enterprises (MSMEs) to gain an edge in international markets, as many enterprises close down in US and the European Union, in the wake of the global recession. According to MSME Secretary Dinesh Rai, the Ministry has assessed the possibility of many IT, textile and auto component manufacturing companies in the US and the EU closing down in the heat of recession. In such a situation, Indian MSMEs can chip into these markets provided the sector is given proper support. Keeping this into perspective, the government has set up a Skill Development Corporation, with a Rs.1,000-crore corpus, to be topped up every year. Besides this, the MSME Ministry has formulated a national fund for the unorganized sector (NAFUS) with a corpus of more than Rs.1,000 crore. The MSME Ministry has also approasched RBI for at least 15% of the priority sector lending for this sector.
  • 3G auction in wait mode gives more bandwidth to BSNL, MTNL : With the 3G spectrum auction getting postponed indefinitely and the Cabinet Committee on Economic Affairs (CCEA) on 29th Jan/09 referring the matter to a Group of Ministers (GoM), state-owned firms BSNL and MTNL are now set to be the only telecom companies to be able to roll out 3G networks during the current year. The two firms will now have at least a year and half’s edge vis-ŕ-vis private players in rolling out 3G services. They will also get more time in paying the Centre for the spectrum.
  • Govt to ease SEZ export norms : The Commerce Ministry is planning to relax norms governing special economic zones (SEZ) – the tax free industrial conclaves – to tide over the slump in demand from major export markets because of the ongoing financial crisis. The details, which are being worked out, will cover sectors that have been adversely affected by the ongoing slowdown. The package will include relaxing foreign exchange earning obligations and permitting units in SEZs to sell in the domestic market without paying customs duty.
  • Centre, States may agree on 16% GST : The Centre and the States may reach an agreement to have 16% rate for goods and services tax (GST) which will be implemented from April 2010. GST, which will replace almost all central and state taxes, could have two components of 8% - one will go to the Centre and the other to the States. However, it will not cover tax on petroleum products and customs duty. Under GST, both the Centre and the States will have powers to tax goods and services. At present, the States cannot tax services.
  • Kamal Nath hints at rate cut and further fiscal measures : At the sidelines of a CII Conference held on 19th Jan/09, the Commerce & Industry Minister Kamal Nath said that the Centre is planning to use the vote on accounts, scheduled in Feb/09, to unleash another round of fiscal measures. This would be in addition to further interest rate cuts.
  • Notifications:
    • Public Notice No.131(RE-2008)/2004-2009 dt. 13th Jan/09 : Replacing the existing Appendix 22A (“Bank Certificate of Exports and Realisation (BRC”) & ANF 4G (“DEPB Application Form”) by new ones as Annexures I & II to the Notification.
    • Customs Circular No.01/2009 dt. 13th Jan/09 : Examination norms for goods exported under Reward Schemes.
  • Tax Relief for IT firms, 100% I-T Waiver for SEZs set up under Parent Cos : In a move that will significantly ease the tax burden on India's biggest Information Technology companies, the government has decided to amend the law relating to tax exemption for units operating out of special economic zones (SEZs). SEZs set up by IT majors like Infosys, Wipro and TCS under the parent companies will soon be able to enjoy 100% tax exemption on profits on a part with those set up as separate entities. PM Manmohan Singh, who is also handling the Finance Ministry, is reported to have agreed to change the relevant norms under the Income Tax Act. The Finance Ministry is likely to issue a notification soon changing rules under Section 10AA(7) of the Income Tax Act, which will allow all SEZ units to be treated as separate entities and thus be eligible for 100% tax exemption on profits for the first five years of operation.
  • Government announces the 2nd stimulus package to boost the economy : After the first package on 7th Dec/08, the Central Government announced the second fiscal stimulus package on 2nd Jan/09 covering a series of measures aimed at easing credit delivery to sectors impacted most by the economic slowdown, but contains limited deficit-financed government spending. RBI also cut repo rate to 5.5% and reverse repo to 4% effective from 2nd January, 2009. Cash reserve ratio cut by 50 bps to 5% wef January 17, 2009. Mr. Montek Singh Ahluwalia, Dy Chairman of the Planning Commission, while announcing the package, said that the fiscal incentives announced so far will continue till a new governments get an opportunity to present a full budget after the general electionos around mid-2009. However, Mr. Ahluwalia did not reveal the cost of this round of fiscal incentive, except to add that tax cuts would involve revenue foreign of Rs.40,000 crore in the current fiscal.
  • DEPB Rates restored to pre-Nov/08 levels & the Scheme extended till 31-12-2009 : As part of the second stimulus package, the government has restored the DEPB rates to pre-November 2008 levels and the Scheme extended till Dec.31, 2009. Duty drawback benefits also enhanced for some categories like knitted fabrics, bicycles etc. with effect from Sept.01, 2008.
  • TDS on contract manufacturing : Small and medium-sized firms that undertake the bulk of actual manufacturing for large companies may now have to forego a part of their revenues upfront as tax deducted at source (TDS) under new rules being considered by the government to widen the tax net and make revenue collections more efficient. The government is proposing changes to tax laws that will mandate companies outsourcing manufacturing work to smaller producers to ddeduct a 2% tax on the order value while making payments. This TDS will be adjusted against actual tax dues at the time these firms pay advance taxes or file annual tax returns. The move would, at the very least, raise working capital requirements and, therefore, costs for the actual production, who in turn would pass on the burden to the outsourcers, and eventually to the final consumers in the form of higher prices. Manufacturers in sectors such as FMCG, consumer electronics, automobiles etc. outsource the actual manufacturing to smaller entities.
  • Notifications:
    • Public Notice No.124(RE-2008)/2004-2009 dt. 3-1-2009 - Withdrawing Public Notice No.102 dt. 5.11.2008 and Restoring the DEPB Rates prior to 5th Nov/08.
    • Public Notice No.125(RE-2008)/2004-2009 dt. 3-1-2009 - Extending the DEPB Scheme upto 31st Dec, 2009
  • Finmin tells DoT to double 3G bid : The Finance Ministry has asked DOT to double the reservice price of pan-India 3G auction to Rs.4,040 crore from the current Rs.2,020 crore. It has also askede broadband wireless access (BWA) reserve price to be doubled to Rs.2,000 crore. The move assumes significance, since by now it is clear that no new foreign telecom major is going to participate in the 3G spectrum auction, which had been postponed to January 30 from the earlier date of January 16, 2009. The government therefore wants to garner the highest possible revenue from the existing operators who are all sure to bid for 3G spectrum. However, now there is every possibility that the auctions would be further postponed. The Ministry has also asked DoT to bring the matter to Cabinet after incorporating the revised reserve price. The issue may throw up a slight problem since any revision would require the matter to be referred to TRAI.
  • Exporters to get a thicker risk cover : The Cabinet Committee on Economic Affairs (CCEA) recently approved a fiscal package that will enable Export Credit Guarantee Corporation (ECGC) to offer higher risk cover to exporters and for banks. This will encourage banks to lend more freely to exporters at a time when payment risk is high because of the ongoing financial crisis in major markets like the US and Europe. ECGC will now provide an enhanced risk cover to 95% (previously 85%) for micro, small and medium enterprises (MSMEs). It will also provide enhanced risk cover of 85% (previously 75%) for bank loans to MSME exporters. The MSME sector accounts for 40% of India’s exports and employs over 40 million people.
  • Common service providers to get EPCG benefit : Giving exporters a reason to cheer, the government has finally extended the Export Promotion Capital Goods Scheme (EPCG) to common service providers working in export clusters. Such clusters should be towns of export excellence from where goods worth more than Rs.250 crore are exported every year. Eligible service providers will be expected to furnish a clear endorsement giving the details of the users and the export obligation which each user would fulfil. The move will help bring down costs of exports, increase efficiency and also give service providers the opportunity to modernize their machinery. Although extension of the EPCG Scheme to common service providers was announced in the Annual Supplement of the Foreign Trade Policy earlier in 2008, CBEC has notified it only now.
  • MVNO to get advance licence : The government is going to make it easy for mobile virtual network operators (MVNO) to enter the country. The Department of Telecommunications (DOT), which is in the process of finalizing a policy to this end, has decided to grant licenses to prospective MVNOs before they tie-up with any telecom service provider. In doing so, DoT has improved upon the TRAI's recommendation that MVNOs be granted license only after they tie up with a licensed service provider. Under MVNO, an operator does not have a telecom license or infrastructure but buys airtime in bulk from a licensed mobile network operator and uses its own brand to sell it to subscriber. The billing is done under the MVNO's brand. The MVNO route has suddenly become very attractive for global telecom players to enter the Indian market which has emerged as the fastest growing in the world, adding over 7 million subscribers each month.
  • Industry Associations, BCCI to come under tax net : The Central Board of Direct Taxes (CBDT) has come out with a circular on 19th December, 2008, redefining the term "charitable purpose" that is likely to bring associations like CII, FICCI, Board of Control for Cricket in India (BCCI) etc. outside the purview of the Income Tax exemptions. The circular now says any entity that does business or trade in exchange for a few or income cannot claim exemption from paying income tax.
  • Bank Guarantee under EPCG falls : The recent excise duty reduction by 4% has resulted a cut in additional customs duty (CVD) too and as a consequence the aggregate import duties came down as well. Besides, the export obligation under EPCG scheme came down and the quantum of bond or bank guarantee to be furnished under the EPCG scheme and duty exemption scheme also fell. For exporter using advance authorization, the quantum of bond and bank guarantee to be furnished to the Customs is based on the duty saved.
  • Centre, States agree to have dual GST : According to the Empowered Committee of State Finance Ministers, which met on 16th Dec/08, the Centre and States have agreed on a uniform dual Goods and Service Tax (GST) regime from April 2010. There will be two slabs for GST – one for Central and another for State taxes - but the rates will be same for goods and services. Combined GST is likely to be within 20%.
  • Service Tax refund rules made easier : Exporters can now get get their service tax refunds much faster. The Central Board of Excise and Customs (CBEC) has further relaxed the procedures for refund of tax paid on specified services used for export of goods and directed its field officials to clear refund claims within 30 days. Even exporters who are not registered with the Central Excise, would now be able to file a refund claim. To get their refund they would have to file a claim with the excise authority having jurisdiction over their factory. The authority will issue them a service tax code to facilitate the refund.
  • Notifications:
    • Public Notice No.114(RE-2008)/2004-2009 dt. 10th Dec/08 : Through this notification, goods such as LCD Television Set (HS Code 85281218 & 85281219), Optical fibres, optical fibre bundles and cables (HS Code 90011000) and Instruments and Appliances used in medical, surgical dental or veterinary sciences including scientigraphic apparatus, other electro-medical apparatus and sight-testing instruments, are covered in Appendix 37D for being eligible to benefits under High Value Added Manufactured Goods (Para 3.10.2 of Foreign Trade Policy 2004-2009) on exports made w.e.f. 1.4.2008. This is subject to the condition that they shall be eligible for this export benefit only if the value addition is at least 100% and if exported as export obligation under Advance Authorisation Scheme or under Duty Free Import Authorisation Scheme
  • RBI & Govt announce measures & package to stimulate economy : In a bid to arrest the present economic slowdown, the Reserve Bank of India (RBI) and the Central Government announced measures and fiscal package on 6th & 7th Dec/08 to stimulate the economy hit hard by the global financial crisis. RBI's measures include Repo rate reduction by 100 bps to 6.5%, Reverse repo rate cut from 6% to 5%, Rs.4,000 crore facility for NHB, Rs.7,000 crore refinance for SIDBI to boost credit flow to SMEs etc. The 10-point fiscal package announced by the Central Government on 7th Dec/08 targets infrastructure, exports, housing, auto and SMEs through at least Rs.30,000 crore worth of additional funding, duty cuts and guarantees. The package includes an across-the-board 4% excise duty cut, additional plan spend of Rs.20,000 crore and export incentives of over Rs.2,000 crore. According to the Commerce & Industry Minister, Shri Kamal Nath, another fiscal stimulus package is likely to be announced next week, which may include enhanced rates of the Duty Drawback and DEPB.
  • FTP to continue after March 2009 : The government has decided to continue with the current Foreign Trade Policy (FTP), scheduled to lapse on March 31, 2009, till the new government is in place at the Centre. The idea behind continuing the policy beyond March 31, 2009 is to ensure that exporters and importers can operate within a stable policy regime. According to a notification issued by DGFT, the FTP 2004-2009, incorporating provisions relating to export and import of goods and services, shall come into force with effect from April 01, 2008, and shall remain in force till further amendments unless otherwise specified.
  • Notifications:
    • Notification No.58/2008-Central Excise dt. 7th Dec/08 - Reducing Excise Duty by 4% across-the-board.
  • Faster tax refunds for SEZs soon : The Commerce Department has taken up the issue of tax refunds for SEZ developers with the Finance Ministry and is pressing for quick implementation of an earlier decision by the Empowered Group of Ministers (EGoM). The EGoM on SEZs headed by External Affairs Minister, Shri Pranab Mukherjee had decided to allow SEZ units and developers to avail refund on service tax paid even for services availed outside the zone. The Department has argued that there is no reason to delay implementation of a decision already taken by the government, especially in the backdrop of the global slowdown.
  • Special amendments in IT Act soon : The Data Security Council of India (DSCI), an independent self-regulatory organization established by NASSCOM, has recommended special amendments, including incorporation of cyber fraud in the Information Technology Act, 2000. The Department of Information Technology is in the process of taking necessary approvals from the Central Government.
  • High-level meeting to end WTO stalemate, revised text in Dec 1st week : The stalemate at the Doha Round negotiations of the World Trade Organisation (WTO) for a global trade deal is likely to end soon, as a meeting of senior officers from member-countries is scheduled to take place next week at the headquarters of WTO in Geneva to discuss new offers on market opening commitments in agriculture and industrial goods. Fresh negotiation texts on agriculture and industrial goods are likely to be out by the first week of Dec/08 to enable the conclusion of the talks by Dec-end.
  • Notifications:
    • Public Notice No.107/RE-2008)/2004-2009 dt. 11th Nov/08 : Making amendments in Handbook of Procedures, Vol.1 (RE-2008) with regard to procedure for filing applications, with Aayaat Niryaat Form (ANF 3F)for High-Tech Productions Export Promotion Scheme (HTPEPS).
  • FTA with Asean on Dec 17 : According to the Minister of State for Commerce, Shri Jairam Ramesh, Indian PM Shri Manmohan Singh would sign Free Trade Agreement (FTA) with Asean in Bangkok on December 17, 2008, signaling a greater political and strategic partnership between South-East Asia and New Delhi.
  • Notifications:
    • Circular No.18/2008-Cus. Dt. 10th Nov/08 : Regarding computation of value under Section 14 for Levy of Export Duty
    • Public Notice No.102(RE-2008)/2004-2009 dt. 5th Nov/08 : New DEPB Rates effective from 5th Nov/08.
  • Govt set up crisis Committee under PM : The government has set up a high-powered Committee under the Chairmanship of the Prime Minister to ensure that the impact of the global crisis on India is minimized and that concerns about the domestic slowdown, liquidity crunch, costly credit and job losses are adequately addressed. The Committee would comprise of Finance Minister, Industry & Commerce Minister and Planning Commission Deputy Chairman. The group will meet regularly to coordinate and decide the governments response to the points raised by industry from time to time with regard to the current global financial crisis.
  • GST to be introduced in a phased manner : While continuing to be committed to an early introduction of the goods and services tax (GST), the government will operationalise the tax in a gradual and phased manner. According to a statement by Mr. Asim Dasgupta, West Bengal FM and Chairman of the Empowered Committee of State Finance Ministers, GST will be implemented in two phases. The government will try to include as many taxes possible in the first phase and the rest will be included in the second phase.
  • Govt to charge for extra spectrum : Having drawn flak for under-pricing spectrum, the government on 4th Nov/08 decided to levy a one-time charge for spectrum above 6.2 MHz in addition to the licence fees and also raised the annual usage charges. The decision was taken at a meeting attended by Communications Minister, A. Raja, PM and FM. India will allocate spectrum for next generation wireless networks to successful bidders by the end of January, 2009 after holding an auction as already planned. The government is planning to put successful bidders for 3G spectrum in a waiting list for issuing spectrum in nine circles, including Delhi, where there might not be enough space available to accommodate four operators after state-owned BSNL and MTNL.
  • Cap for sops to solar units may be hiked: The Government plans to hike the 50-mw cap for providing incentives to solar power plants. The idea is to encourage more companies to tap India’s solar power potential in order to meet the set target of 10,000 mw of solar power generation by 2020 as part of the solar mission. Under the present policy, the government provides an incentive of Rs. 10 a unit for grid-connected solar thermal power plants and Rs. 12 per unit of electricity generated from solar photo-voltaic cells. Companies like Reliance Industries, Moser Baer, Essar Power, BHEL and tata BP Solar are making heavy investments in solar energy generation.
  • Centre rejects VAT panel’s idea of multiple GST rates: Sparks seem to be flying over the proposed goods and services tax (GST) with the Centre and states differing over the model for the tax. The Centre has asked the empowered committee of state Finance Ministers to reconsider its proposal to levy a GST with multiple rates for goods and services. It is instead pushing for the original plan of merging excise duty, service tax and state levies into a single tax.
  • Commerce Minister’s all-out support to Industrial Parks: The Industrial Parks Scheme – which provides a 10 year tax holiday to units coming up in select industrial clusters – has become the latest bone of contention in commerce & industry ministry’s tussle with the finance ministry. Commerce & Industry Minister Mr. Kamal Nath has drawn Prime Minister’s attention to the finance ministry’s reluctance to nominate the Department of Industrial Policy and Promotion (DIPP) as the implementing agency for the scheme which has been extended till March 2009. The Commerce Minister in a recent communication to the Prime Minister’s Office, has also said the plea to reduce the number of units necessary to quality for tax breaks available to an industrial park should be reduced. The Department of Revenue is yet to reduce the number to 20 in the case of multi-product industrial parks and five in case of IT/ITeS industrial parks, says the communication. Only parks with at least 30 units are entitled to the 10-year tax holiday. Interestingly, IT and ITeS was allowed the benefit only after an intervention by the Prime Minister. The Prime Minister’s Office had advised the Department of Revenue to make DIPP the implementing agency. The new industrial parks scheme notified by the Central board of Direct Taxes is valid till March 2009 while the earlier scheme was valid till March 2006. The income-tax holiday is available to industrial park units under section 80-IA (4) (iii) of the Income-Tax Act. The government made changes in the scheme when it was notified afresh. The revised scheme prescribes a minimum 50,000 sq.m for each industrial park, indicating government’s emphasis on large clusters.
  • RBI liberalizes ECB guidelines further; Telcos Can Go For Overseas Borrowings To pay 3G Fees: To allow easier access to overseas funds, the Reserve Bank of India has further liberalised the external commercial borrowing (ECB) norms for companies. Besides allowing ECB to be used to pay the telecom licence fees for 3G spectrum, RBI also increased the ceiling on amount that can be raised under the approval route to meet rupee as well as foreign exchange expenditure from $100 million to $500 million per annum.
  • Notifications:
    • Customs Circular No.14/2008 dt. 26th Sept/08 : Procedure for issue of Installation Certificate for the Capital Goods imported/procured locally under EPCG Scheme.
    • Customs Circular No.15/2008 dt. 26th Sept/08 : Authentication of Supply Invoice by the Central Excise Authorities for claiming Deemed Export Benefits.
  • Notifications:
    • Circular No.105/08/2008 dt. 16th Sept/08 : Regarding Service Tax issues relating to units in SEZ. Through this circular by the Finance Ministry, the following issues have been clarified:-

      Non-payment of service tax by SEZ units providing taxable service outside SEZ : Although taxable services received by SEZ units and SEZ developers for consumption within the SEZ are exempt from Service Tax under Notification No.4/2004-ST dated 31.3.2004, Service Tax is payable by SEZ units on taxable services except those speofoca;;u exempted.
      Refund of Service Tax on taxable services used for the purposes of exports of goods by SEZ units : Refund of Service Tax paid on taxable services used for exports by SEZ units is processed by respective S.T. Commissionerates in Delhi, Mumbai, Bangalore, Ahmedabad, Kolkata and Chennai and the jurisdictional Central Excise Commissionerates elsewhere.
    • NMCC calls for scrapping inverted duty structures, bringing in GST to boost manufacturing : Stressing on the need for rationalization and simplification of the country indirect tax structure, the National Manufacturing Competitiveness Council (NMCC) has called for an early implementation of the goods and services tax (GST), abolition of inverted duty structures and linking fiscal incentives to value addition by industries. The panel led by Mr. V. Krishnamurthy, Chairman, NMCC in its report – Measures for Ensuring Sustained Growth of the Indian Manufacturing Sector – submitted to the Prime Minister on 20th Sept/08 has said bringing about such changes will help promote domestic manufacturing and industry and help them compete with other countries in the international market. Calling for the reduction of the total tax level in the country, the report notes “A study done in the year 2002 comparing the prices of a range of manufactured products in India and China found that the prices of Indian products were higher, on average, between 28% and 33%, half of which is attributed to the difference in indirect tax levels. In this regard, it is imperative for the Finance Ministry to stick to its target of abolishing the CST by 2010 and introducting GST that would subsume service tax and excise duty along with a plethora of state taxes.
  • Notifications:
    • Public Notice No.81(RE-2008)/2004-2009 dt. 16th Sept/08 : Replacing Para 2(a) and 2(b) of the Appendix 14-1-1 by the following:-
      “2(a) The supplies from DTA to EOU/EHTP/STP units must be utilized by them for production of goods/services and may include raw material, components, consumables, packing materials, capital goods, spares, material handling equipment etc. on which CST has been actually paid by the EOU/EHTP/STP”.
      “2(b) While dealing with the application for reimbursement of CST, the Development Commissioner or the designated officer of the EHTP/STP shall see, inter alia, that the purchases are essential for the production of goods/services by the units”. Clause (a) of undertaking and declaration below Annexure 1 in Appendix 14-1-1 has also been replaced.
  • IT tax sop may be extended : Union Minister for IT and Communication Mr. A Raja has said that he would appeal to the Government to extend the tax concessions given to software technology parks under the STPI scheme for one more year. As the tax concessions given to the STPs is expected to end in 2009. Mr. Raja said that he would request Prime Minister Mr. Manmohan Singh and Finance Minister Mr. P Chidambaram to extend the concessions policy for one more year
  • Export sops to end : Taking note of the windfall for exporters from a sharp decline in the value of the rupee, Commerce Secretary Mr. G K Pillai says, the Government would end sops for the exporting community, except for the textile sector, which is still facing tough global terrain
  • DoT retains reserve price for 3G spectrum : The Department of Telecommunications has ignored Finance Ministry's suggestion to raise the reserve price of spectrum for third generation (3G) mobile services to Rs. 2,500 crore. DoT, after considering the suggestion of Finance Ministry to raise the reserve price to Rs. 2,500 crore from Rs. 2,200 crore, maintained status quo since the ascending order auction would in any case discover the price in consonance with market conditions.
  • TRAI scans revenue impact of separate tower business : The hiving off of the tower business into separate ventures by the major telecom operators has come under the Telecom Regulatory Authority of India's (Trai) scanner. The regulator has initiated a study as to how the operators are separating the accounts of their parent firm, providing the telecom services and the tower business, which gives the passive and active infrastructure. According to Trai Officials, the purpose is to find out if demerging the tower business would reduce the payment of licence fee to the Government by the operators.
  • RBI steps in to arrest fall in rupee : As rupee lost 1.8% to close at a 27-month low of Rs. 46.89 per dollar on mid of September, RBI intervented in the forex market. It not only sold dollar aggressively to contain the slide in the rupee but also announced a slew of measures like hiking the interest rate on foreign currency deposits.
  • Notifications:
    • Policy Circular No.31 (RE-2008)/2004-2009 dt. 8th Sept/08 : Clarification on transfer of inputs to the Notified areas stated in paragraph 4.5 of HBP v.1 under DFIA scheme.
  • Govt announces revised duty drawback rates effective from 1st Sept/08 : Through circular No.13/2008-Cus and Notification No.103/2008-Cus, both dated 29th August, 2008, the Finance Ministry has announced the revised All Industry Rates of Duty Drawback for 2008-09 effective from 1st September, 2008. In the case of electrical machinery and equipment under Chapter 85, the rates have been revised downwards marginally.
  • 3G auctions to end by Dec/08 : DoT Secretary : Speaking on the sidelines of the Nokia Siemens Networks ‘Telecom Energy Efficiency Summit’ in Mumbai, the DoT Secretary, Shri Siddhartha Behura stated that the 3G electronic-acutions will be completed between October and December, 2008. There would be 66 auctions – 22 each for CDMA, GSM and PWA as per the circles. The operator will be under obligation to roll out the 3G services within a span of five years, else pay a penality of 2.5% of the AGR as mentioned in guidelines.
  • TRAI announces measures to waive Processing Charges on Recharge Cards : Telecom regular TRAI on 1st Sept/08 announced a series of measures, largely for pre-paid mobile customers, including waiving of processing charges on recharge cards, full talk time on all recharges, automatic extension of all tariff cuts to the customers, no levying of charges for moving from pre-paid to post-paid connections. Lifetime customers need recharge only once in six months etc. TRAI has directed telecos to comply with its directive from September 15, 2008.
  • Notifications:
    • Notification No.103/2008-Cus dt. 29th August, 2008 : Regarding revised All Industry Rates of Duty Drawback for 2008-09 effective from 1st Sept/08.
  • 3G auction by Oct, services may roll out this year : According to a statement by the Telecom Minister, Shri A. Raja on 28th Aug/08, CDMA operators too would have to bid for 3G radio frequencies, while adding that the government hoped to complete the auctions for 3G spectrum by October, 2008 and the operators to roll out their 3G services in 2008.
  • Notifications:
    • RBI Ref. No. RBI/2008-09/127- A. P. (DIR Series) Circular No. 06 dt. 13th Aug/08 : Liberalising the procedure for dispatch of shipping documents by the exporter direct to the consignee, and for realisation and repatriation of export proceeds. The simplification of procedure will apply to all exports which are up to USD 1 million or its equivalent per export shipment.
    • RBI Ref. No.RBI/2008-09/134–A. P. (DIR Series) Circular No. 09 dt 21st Aug/08 : Lliberalising the advance remittance for import of goods.
  • Net telephony freed, call rates set to plunge further : With the announcement of rules by TRAI on 18th Aug/08 permitting calls from personal computers to fixed line and mobile phones, long-distance telecom tariffs could be cheap as much as 10-40 paise and possibly make free local calls from the computers, if these recommendations are implemented. Currently, a voice call can travel between two computers but not from a mobile or a fixed phone. This is expected to open huge channels of revenues for the internet service providers (ISPs), who would not need to acquire a Unified Access Service Licence (UASL) for operating these services.
  • Cabinet clears IPTV Policy: Decks have been cleared for the roll out of Internet Protocol TV or IPTV by the Union Cabinet on 21st Aug/08, with announcement of necessary changes to the current downlinking guidelines for TV channels. The Cabinet clearance paves the way for the commercial roll-out of IPTV services by telcos, Cable TV operators and ISPs IPTV means delivery of television channels using high-speed internet connections and dedicated services. It allowed the consumers to not only watch the regular television channels but also empowers them with a number of value added services like interactive games, television content on demand, time-shift TV etc. With the introduction of IPTV, customers have three platforms for viewing TV channels – IPTV, DTH and CAS. While all telcos will now be able to offer triple play services, only those ISPs which have a net worth of more than Rs.100 crore can provide IPTV services.
  • Notifications
    • Customs Notification No. 100/2008-NT dated 13th August 2008: Makes the Customs Tariff [Determination of Origin of Products under the Duty Free Tariff Preference Scheme for Least Developed Countries] Rules, 2008
    • Customs Notification No. 96/2008 dated 13th August 2008: Duty Free Tariff Preference Scheme for Least Developed Countries. The Notification is regarding tariff concessions on the applied rates of duty for specified goods when imported into India from countries listed in the Schedule to the Notification viz. Kingdom of Cambodia and the United Republic of Tanzania.
  • Notifications
    • Notification No.29(RE-2008)/2004-09 dt. 6th August, 2008 : Adding a new Paragraph 8.5.2 (after para 8.5.1) under sub-head ‘Eligible for refund of terminal excise duty/drawback’ in Foreign Trade Policy 2004-09 as follows – “For the applications of Duty Drawback and Terminal Excise Duty refund submitted on or after 06.08.2008, the period of 30 days will be counted from the date of receipt of complete applications as provided in Paragraph 9.10.1 of HBP Vol 1 2004-09 (updated as on 11.04.2008) and interest will be payable if the case is not settled within 30 days of receipt of complete application”.
    • Public Notice No.58(RE-2008)/2004-2009 dt. 5th August, 2008 : Para 6.35 in the Handbook of Procedures (Vol. 1) substituted as follows – “Clearance of capital goods, including second hand, in DTA shall be allowed as per FTP on payment of applicable duty and import policy in force on date of such clearance”.
    • Customs Notification No.93/2008 dt. 1st August, 2008 : Substituting sub-paragraph © in paragraph 2 of Notification No.102/2007-Customs dt. 14-9-2007 as follows – “© the importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer before the expiry of one year from the date of payment of the said additional duty of customs”.
  • Government announces 3G policy broad guidelines, with State-owned telcos to launch services in six months : With the announcement of 3G telecom policy guidelines on 1st Aug/08 by the Department of Telecom and allotting the two State-owned telecoms – BSNL and MTNL – 3G spectrum immediately, the Indian consumers will have these services in six months, offering internet access at speeds that are at least 30 times faster than 2G. The move will give BSNL and MTNL a 4-to-5 month head-start in the 3G space over private sector rivals. Details of the auctioning of spectrum – radio frequencies that enable wireless communkcations – and the number of players allowed in each circle etc. will be finalized within four months. The state-owned corporations, for which spectrum has already been reserved, will have to match highest bid after the auction for private companies is completed. Government expects to earn Rs.30,000-40,000 crore through this 3G auction. Industry experts predit 45-70 million 3G customers by 2012, roughtly 10% of the mobile customer base. New players that win bids will, however, have to pay additional cash (Rs.1,650 crore for an all-India 3G licence) for mandatorily taking a universal access service licence (UASL) also.
  • Interest subvention scheme for exporters to end on Sept. 30, 2008 : According to an RBI notification issued recently, the government will withdraw the interest subvention scheme for exporters on account of rise in value of the rupee with effect from 30th September, 2008. Under the scheme, exporters were compensated for reduction in profits due to appreciation of the rupee against the dollar last fiscal.
  • Notifications
    • Policy Circular No.23(RE-08)/2004-2009 dt 28th July, 2008 : Regarding eligibility of supplies to EOUs for deemed export benefits
  • Anti-dumping duty slapped on Colour Picture Tubes : Through Notification No.90/2008-Customs dated 24th July, 2008, the government slapped anti-dumping duty on imported picture tubes for Colour TVs from China, Malaysia, Thailand and Korea, after it found that these countries were “dumping” the product into India. The duty will range between Rs.878 and Rs.4,369 on a colour picture tube depending on the size of screen. The decision was based on preliminary findings of the designated authority in the Commerce Ministry, which showed that the goods were being exported to India below their normal value, causing “material injury to the domestic industry” caused by the dumped imports from the subject countries.
  • DGEP issues circular making amendments/changes in FTP 2004-2009 : The Directorate General of Export Promotion (DGEP), Central Board of Excise & Customs has issued Circular No. 12/2008-Customs dated 24th July 2008 briefly explaining the various changes/ amendments that have been made in the recent past. The Foreign Trade Policy (2004-2009) and the Handbook of Procedures, Volume 1 (HBP) have undergone many changes/ amendments in relation to EOU/EHTP/STP/BTP units under Export Oriented Undertaking Schemes from time to time. In addition, measures for procedural simplification have also been announced.
  • RBI increases Repo and CRR Rates again, and revises FY09 GDP forecast to 8% : In the first quarter review of the Annual Monetary Policy statement released by RBI on 29th July, 2008, the Central Bank announced fresh monetary tightening measures that are set to raise interest rates by around 50 basis points. RBI raised the repo rate with immediate effect, or the rate at which it lends, 50 basis points to 9%, the third increase in two months. In addition, the cash reserve ratio (CRR) or the proporation of deposits that bank set aside, will also go up another 25 basis points to 9% with effect from 30th August, 2008. Announcing the measures, the RBI Governor, Mr. Y.V. Reddy described the present 11.89% rate of inflation as an “intolerable level” and made it clear that liquidity management will continue to receive priority in the hierarchy of policy objectives over the period ahead. The Central Bank, which has targeted 7% inflation by March, 2009, expects that these policy actions are aimed to bring down current levels of inflation to a tolerable below 5% as soon as possible and to around 3% over the medium term. RBI has also revised its GDP growth projection for 2008-09 from the range of 8-8.5% to around 8%.
  • DoT to grant 2 licences for number portability : The Department of Telecommunications (DOT) has decided to grant two licences to run mobile number portability (MNP) services, which allow subscribers to retain their numbers when they change services. It has, however, delayed the launch of the services for Delhi, Mumbai, Kolkata and Tamilnadu, including Chennai, to February or March 2009 against the original schedule of end-2008. DoT has also finalized the schedule extending MNP country-wide by Aug-Sept 2009. The policy is expected to be announced by Communications Minister shortly.
  • Notifications
    • Notification No.89/2008-Customs dt. 23rd July, 2008 : Imposing Anti-dumping duty on imported DVD-R/ DVD-RW (Heading 8523) from China PR, Hong Kong, Taiwan etc.
  • New policy to boost defence, private sector synergy : The new Defence Procurement Policy 2008 (DPP), that is expected to be released shortly and likely to be operative from 1st August, 2008, envisage greater role for the private sector in supplying much needed equipment to the country’s armed forces. According to the Defence Minister, Shri A.K. Antony, the government’s endeavour is to achieve maximum synergy between the defence, public & private sectors, in order to create a competitive defence technology edge and strengthen the industry base in the country. The new purchase policy is expected to promote indigenization and encourage wider representation on panels doing technical evaluation of indigenously designed military platform..
  • Notifications:
    • Policy circular No.17/RE-08/2004-2009 dt. 4th July, 2008 : Clarification regarding submission of multiple applications and part payments for claiming deemed export benefits under para 8.3.1. of HBP. It has been clarified that in respect of all the claims arising for a particular calendar month/quarter (as per option of the applicant), a single consolidated application should be filed within the stipulated time period.
  • CTT may be notified soon to curb prices : With inflation showing no signs of cooling off despite the array of fiscal and monetary measures employed by the Cengtre, the government is set to operationalise the Commodities Transaction Tax (CTT) sooner rather than later. This is a U-turn on its earlier stance to put off the notification of CTT to a later date as, the government felt, CTT would hurt trading volumes and raise inflationary pressures. CTT, on the lintes of securities transaction tax (STT), is a levy on commodities transactions, including the sale and purchase of options in goods and any other commodity derivatives. The tax rate would be between 0.017% and 0.125%.
  • Govt SEZs likely to get autonomy : The seven government-owned special economic zones (SEZs) across the country are likely to be given autonomy, resulting in greater financial flexibility for these tax-free enclaves. The move will help these zones compete with the private sector SEZs, which are attracting investment from companies. The government SEZs, which were earlier known as export processing zones and currently under the supervision of Development Commissioners, are located in Kandla, Chennai, Falta, Cochin, Noida, Santacruz and Visakhapatnam.
  • DoT hikes reserve price for broadband services (WiMAX) : The Deparment of Telecommunications (DoT) has decided to hike four-fold the reserve price for broadband wireless (also called WiMAX) access services in the country. TRAI has accepted DoT’s demand to hike the reserve price for WiMax spectrum auction to Rs.40 crore for category A, Rs.20 crore for category B and Rs.7.5 crore for C circles.
  • Bidding to decide 3G price for BSNL, MTNL : DOT has decided to allocate one block of 3G spectrum in each service area except Delhi and Mumbai to BSNL and to MTNL (one block area in Delhi and Mumbai) at a price equivalent to the highest bid in the respective service areas. According to the proposed guidelines, the bidding process for 3G spectrum will be for every telecom service area for which a reserve price will be set.
  • Notifications:
    • Customs Circular No.11/2008 dt. 1st July, 2008 : Issues relating to classification of Large Format Printers.
    • Notification No.21(RE-2008)/2004-2009 dt 1st July, 2008 : Amendment in Foreign Trade Policy and adding the following at the end of paragraph 6.5 – “Whenever a unit is unable to export due to prohibition/restriction imposed on export of any product mentioned in LoP, the five year block period for calculation of NFE earnings may be suitably extended by BoA”.
  • Exporters allowed to open Bank Account in any core banking branch for drawback payments : Through Circular No.01/2008-Systems dated 24th June, 2008 issued by the Directorate General of Systems & Data Management, exporters have been allowed to open the Bank Account in any core banking branch of the authorized bank for processing of drawback shipping bills and claims under the Indian Customs EDI Systems (ICES). With the introduction of this procedure effective from 1st July, 2008, it will no longer be mandatory for any new exporter to open a bank account only with the designated authorized bank branch at the port of export.
  • Export sops to go as rupee falls : Government is likely to withdraw from 30th Sept/08 a host of sops given in 2007 to Indian exporters to help tide over the sharp appreciation of the rupee. This is on account of the rupee depreciating about 10% against the US Dollar since April 2008. The sops that will be rolled back include interest rate subvention on pre- and post-export credit as well as the 1-3% increase in duty drawback and DEPB rates, which were announced in various phases last year. The enhanced duty drawback and DEPB rates will be rolled back to the values which they were in before the sops were announced. A decision on this is likely to be formally announced later in July/08.
  • GST to be mother of all goods taxes : States may have to opt for subsuming all taxes on goods, like purchase tax, under the unified goods and services tax (GST) regime. The Centre, which is likely to give its report on the Empowered Committee’s recommended framework on GST in the next 15 days, is against continuing such taxes in the new regime.
  • RBI raises CRR, repo rate by 50 bps to rein inflation : In one of the steepest measures in recent times, the Reserve Bank of India (RBI) on 24th June, 2008 launched a frontal attack on inflation by increasing cash reserve ratio (CRR) in two stages – to 8.5% from the fortnight of beginning July 5 and to 8.75% from the fortnight on July 19. Repo rate has also been hiked to 8.5% with immediate effect. The moves are expected to trigger an across-the-board hike of about 50 basis points in interest rates. CRR hike will suck out around Rs.17,000-18,000 crore from the system. .
  • DoT forms panel for 2G spectrum allocation, pricing : The Department of Telecom (DoT) has formed a Committee to recommend the methodology for allocation and pricing of 2G spectrum of mobile voice services. The Committee will be headed by Mr. Subhod Kumar, Addl Secretary, ODT and has other senior officials from the Department besides professors from IITs, IIMs.
  • New Manufacturing Policy by end-2008 : India is likely to implement a manufacturing policy by the end of this year to counter cheap imports and boost compeititiveness of the manufacturing, which currently contributes nearly 16% to its GDP. A high-powered Group headed by the NMCC Chairman, Mr. V. Krishnamurthy will submit a report in this regard in the next few days recommending measures to boost productivity in the manufacturing sector, which grew by 8.6% in 2007-08 against 12.5% in 2006-07. The group includes Secretaries of the Departments of Finance, Revenue, Commerce, Textiles and Industry.
  • No tax relief for new IT Investment Regions : Yielding to demand from the IT industry to create modern integrated townships that would be bereft of infrastructure snags, the Union government has given a green signal for establishment of Information Technology Investment Regions (ITIRs) across the country as part of the strategy to provide an investor-friendly environment. But, while speaking to the media on the sidelines of the Nasscom’s sumiit in Bangalore, the DIT Secretary, Shri Jainder Singh, said that no new tax benefits will be offered in ITIRs.
  • Protecting exporters from govt bans : Though Public Notice No.26/2008 dt.3/6/2008, DGFT has added Para 5.11.4 in the Handbook of Procedures, Vol-1 (HB-1) that whenever a ban/restriction is imposed on export of any product, export obligation period in respect of Export Promotion Ca[pital Goods authorizations already issued prior to imposition of ban of such export products, would stand automatically extended for a period equivalent to the duration of the ban, without any composition fee and exporter would not be required to fulfil average export obligation as well for the ban period.
  • Clarificcation on Payment of Interest on delayed refund of Deemed Export DBK/TED/CST : Through Policy Circular No.9 (RE-2008)/2004-2009 dated 5th June, 2008 issued by DGFT, it has been clarified that the claim for interest may be filed within 90 days from 29.4.2008, which is the date of issue Public Notice No.10(RE-2008)/2004-2009 (releasing Aayat Niryat Form). The same period of 90 days will also be applicable for old cases approved on or after 1.4.2007 till 29.4.2008. For fresh cases, the period of 90 days will apply from the date of issue of cheque.
  • Govt reduces CST to 2% : The central Government has after all reduced the Central Sales Tax (CST) a levy on inter-state sale of goods, from 3% to 2% effective from 1st June, 2008 – a delay of two months from the earlier schedule. Department of Revenue issued a notification on 30th May, 2008 to be brought into effect from June 01, 2008 the new reduced rate of CST of 2% on inter-state sales of goods.
  • Non-tariff barriers pose hurdles for exporters : The Commerce Minister Mr. Kamal Nath says, “India ill not hesitate to take strong retaliatory action against countries trying to block our exports. For far too long, India has been a victim of NTBs in other countries. It is necessary for India to be more aggressive.”
  • Exhibition cost is business expense, rules ITAT: Companies can treat expenditure incurred on participating in exhibitions as business expense and claim tax benefits, the Income Tax Appellate Tribunal has said in a recent decision. Giving its ruling in a case pertaining to the Indian subsidiary of Austrian auto component maker Styler Daimler Puch, ITAT said expenditure on exhibitions is aimed to propagate business and hence cannot allowed for claiming tax benefits by the tax department. “All the expenses were aimed to propagate the assessee’s business…I accordingly allow the expenses,” ITAT President Mr. Vimal Gandhi said. The case pertains to participation of Austrian company’s subsidiary Styler India, in Auto Expo 1998, on which the company spent about Rs. 15 Lakh.
  • CST phase out delayed: In a fresh setback to the phase-out of the Central Sales Tax (CST), the Centre and States have once again been unable to work out an adequate and agreeable compensation package for the planned 1% cut in the tax. The reduction in the CST rate was originally slated to be notified from April 1, 2008, as had been announced in this year’s Budget and would have brought it down from 3% to 2%.
    The statement has come up despite the empowered committee in its meeting earlier this month re-iterating its promise to reduce the rate of CST from 3% to 2%. Sources close to the development said the phase out process of the tax may now in fact get temporarily postponed, if a compromise is not worked out soon enough.
  • Digital TV may have higher FDI cap: The Government may bring in separate guidelines and foreign investment rules for the cable industry based on the mode of distribution of signals to end consumers. With the Government gearing up to announce the policy for digital platforms like Headend in the Sky (HITS) and IPTV will need huge Foreign Direct Investment (FDI) to expand. For this reason, they want different FDI rules for these services than the analogue cable industry.
  • Scale of Application fee for DEPB and other Duty Credit Scheme

    Application for Duty Entitlement Passbook (DEPB) and other Duty Credit Schemes Two per thousand or part thereof subject to a minimum of Two Hundred and maximum of One Lakh and Fifty Thousand. However, for applications filed electronically, the maximum fee would be Rs Seventy Five Thousand

  • Public Notice No. 15 (RE-2008) /2004-09 dated 12th May, 2008. Issued by DGFT
  • CBEC clarifies Cenvat credit rules: In a significant relief to service providers, the Central Board of Excise and Customs has clarified that exported services on which service tax has not been paid will not be treated as exempted services for the purpose of availing Central Value Added Tax (Cenvat) credit.

    This would imply that such service providers could continue to take input tax credit even if they do not pay service tax. "This is a very important clarification that has cleared some doubts but there are a few more pending issues". Tax experts feel the circular will clear many issues.

    The CBEC clarification comes in the wake of amendments to the Cenvat Credit Rules in this year's Budget. Under the amendment, assesses opting not to maintain separate Cenvat Credit accounts have two options for payment of the tax. They can pay 10% of the value of the exempted goods or 8% of the value of the exempted services. Alternatively they can pay an amount equivalent to the Cenvat Credit attributable to inputs and input services used in manufacture of exempted goods.

    CBEC Circular No. 868/6/2008-CX
  • Some Relief to Metallised Film Manufacturers: The Ministry of Finance has issued Notification No. 22/CE (NT) on 2nd May, 2008 which gives some relief to manufacturers of metallised plastic film, but still leaves something to be desired. According to the Notification, where an assessee has paid duty of excise on metallised plastic film, falling under Chapter 39 (referred to as final product), the CENVAT credit taken or utilized, of the duty or tax or cess paid on inputs, capital goods and input services used in the making of the said final product, shall not be required to be reversed, irrespective of the fact that the process of metallization of duty-paid film was held as not amounting to manufacture by the Supreme Court in Civil appeal Nos. 3224-3225 of 1998 with C.A. No. 5716 of 1998, decided on the 12th February, 2004 in the case of M/S Metlex (I) Pvt. Ltd. Vs Commissioner of Central Excise, New Delhi, subject to following conditions:

    (a) The said non-reversal shall be allowed only for the CENVAT credit taken upto 12th February, 2004.

    (b) The said non-reversal shall be allowed only when excise duty has been paid on removal of the said final product.

    (c) The said assessee shall not a claim of refund of the excise duty paid by him on the said final product.

    Provided that the CENVAT credit, if any, taken by the buyer of the said final product, of the excise duty paid by the said assessee on the said final product made and cleared upto 12th February, 2004 shall not be required to be reversed. [Notification No. 22/Central Excise (Non Tariff)]

  • Filing of claim for refund of Service Tax paid under Notification No. 41/2007-ST: To clear some doubts for filing of claim for refund of service Tax paid under Notification No. 41/2007-ST a certificate has been issued by the Ministry of Finance through Circular No. 101/4/2008-ST dated 12th may, 2008. In cases where a premises or an office of a merchant exporter is registered with the department under Service Tax Law, the merchant exporter can, at his option, file refund claim with the Jurisdictional Office, he is registered with a clarification has been issued by the Ministry of Finance.

    (Please refer to Circular No. 101/4/2008-ST dated 12th May, 2008)

  • Capital Goods & Spare parts get relief from Customs & Additional Duty: Customs Notification No. 64/2008 dated 9th May, 2008 exempts some goods from customs Duty leviable thereon in excess of the amount calculated at the rate of three percent ad-valorem. It also exempts for the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff act, when specifically claimed by the importer.

    The exemption which is subject to some conditions is applicable is

    1. Capital goods for pre-production, production and post production including second hand capital goods.
    2. Capital goods in Semi Knocked Down (SKD) / Completely Knocked Down (CKD) conditions to be assembled into capital goods by the importer.
    3. Spare parts of goods specified at Serial Nos. 1 and 2 as actually imported and required for maintenance of capital goods so imported, assembled, or manufactured.
    4. Spare parts for the existing plant and machinery of the licence or authorization holder.
    5. Motor cars, sports utility vehicles / all purpose vehicles.
    (In details, please refer to Customs Notification No. 64/2008 dated 9th May, 2008)
  • GST may miss deadline - (States seek dual rates): The plan to roll out a unified goods and Service Tax (GST) from 2010, subsuming all indirect taxes at the Centre and States, seems headed for trouble. States have demanded differential rates of tax for goods and services, in addition to different rates at the Centre and States. This run counter to the Center's thinking on the subject.

    The States' position has been conveyed to the centre in the report of the Empowered Committee of State Finance Ministers, headed by West Bengal Finance Minister Asim Dasgupta, submitted to the Centre earlier this month. With differences arising between the Centre and States on the very model of GST, and discussions on proposed rates yet to start, the GST rollout could miss its April 1, 2010, deadline.

  • CST phase-out misses deadline: CST phase-out misses deadline as negotiations between the Union Finance Ministry and the Empowered Committee of State Finance Ministers cannot reach consensus over the Compensation Package. The anticipated cut in the CST rate from 3% to 2% which was to come into effect from 1st April, this year has not been notified due to differences between the Centre and the States.
  • Government plans fresh efforts for WTO deal: India is to launch fresh efforts to INK a free trade agreement with Asean bloc and iron out differences with US to seal a WTO deal under ongoing Doha Round. Commerce and Industry Minister Kamal Nath is attending the Asean Economic Ministers’ conference in Indonesia in order to move forward on the trade agreement. The Commerce Minister said it is important for India to be integrated with the region. India’s merchandise trade was close to $400 billion in 2007-08 with exports growing at 23% and imports 27%.
  • India – Asean FTA faces hurdle at Indonesia end: The final talks on the proposed Free Trade Agreement between India and the 10-member Association of Southeast Asian Nations (Asean) has been further stretched with Indonesia continuing to raise objections. At the final stage ministerial –level discussions held at Nusa Dua in Indonesia recently, negotiators from India and Indonesia once again failed to resolve the dispute over their respective increased market access demands. The talks for the proposed FTA had begun three years ago. India-Indonesia bilateral trade in 2006-07 grew 41% to US$6.1 billion. Indonesia’s exports to India contribute US$4.1 billion.
  • MVNO regime could be ushered in soon: The government is set to usher in mobile virtual network operators (MVNOs), allowing players without telecom licenses to provide services by buying bulk airtime from licensees and reselling it to consumers. Regulator Trai has issued a consultation paper soliciting the views of various stakeholders on the subject.
  • Govt. considering proposal to scrap license fees for landline phones: Two months after the access deficit charge scheme, which compensated Bharat Sanchar Nigam Ltd (BSNL) for its loss-making rural telephony operations, was phased out, the Telecom Commission today discussed a proposal to waive in perpetuity the annual revenue share (license fee) to be paid by fixed-line service providers in the country. The proposal is aimed at arresting the decline in wireline services growth and spur availability of broadband internet access across the country.
  • I-T benefit for software extended upto March 2010 : In a huge relief to the IT industry, software companies have been allowed to enjoy income tax benefits for one more year from March 2009 to 31st March 2010.
  • RBI hikes CRR, Interest Rates unchanged : The Reserve Bank of India in its annual policy review increased CRR (cash reserve ratio) by 25 basis points to 8.25% with effect from May 24, 2008, and kept interest rates unchanged.
  • Fixed-line telephony to be exempted from licence fee : At a function organized by COAI recently, the Telecom Minister Shri A. Raja has said that the fixed-line telephony will be exempted from licence fee to encourage service providers, especially those in the private sector, to go to the rural areas. BSNL will be the largest beneficiary of this move as it will save upto Rs.1,200 crore annually. Private operators such as Airtel, Reliance and Tata have minimum presence in the landline space. Currently, telecom operators pay 6-10% of their total revenues, including revenue from landline and broadband, towards licence fees, charged as percentage of AGR.
  • Merger norms for telecom tightened : The Department of Telecommunications (DoT) has issued guidelines significantly tightening the noose on mergers among telecom operators within a circle by imposing a three-year lock-in period, besides making it mandatory for them to take prior permission from the Ministry. It has also made post-merger rules on retention of spectrum much more stringent. According to the existing policy, operators do not need prior permission from DoT or have a lock-in period for mergers.
  • CBEC issues instructions for timely payment of refund claims to exporters : Government of India has already notified refund of service tax paid on sixteen taxabale services, whether or not input services, use of which could be attributable to export goods, based on verifiable methods. Through a separate circular dated 17th April, 2008, CBEC has instructed all field formations to ensurely timely and expeditious payment of refund claims to exporters. Accordingly, any refund claim which is not finalized within a period of 30 days from the date of filing is required to be reported by the Commissioner to the concerned Chief Commissioner and any refund claim not finalized within 45 days, for whatsoever reasons, has to be reported to the CBEC. Field officers have also been instructed to take special efforts to dispose of refund claims of small and medium exporters on priorty basis. Above circular is available on CBEC website – http/www.cbec.gov.in.
  • DoT plans limited 3G auction by 2008-end : The Department of Telecom (DOT) plans to auction third generation (3G) spectrum in two phases – the first by 2008-end and the next after March 2009. This is because the alternate network for the defence forces, which will result in vacation of radio frequencies for 3G, will be ready only by March 2009.
  • Notifications :
    • CBEC Circular No.341/15/2007-TRU dt. 17th April, 2008 : Instructions for timely payment of refund claims to exporters.
  • Highlights of Annual Supplement to FTP 2008-08 :
    • DEPB Scheme extended till May 2009.
    • IT hardware brought under special focus
    • IT exemption for 100% EOUs extended by a year till March 2010
    • Reduced interest rates for rupee-hit and small exporters extended by a year
    • Average export obligation under EPCG scheme lowered, large exporters can cut commitments
  • EOUs, STPIs get excise, customs duty benefits : Through notifications issued by CBEC, the Finance Ministry has permitted EOUs and STPI units to subcontract abroad and sell the finished goods directly from there without having to bring them back to India. This move will help such units significantly lower transaction costs as earlier semi finished or semi processed goods sub congtracted abroad had to be brought back to the country before exporting them. In the same notification, the CBEC has also hiked the customs and excise duty exemptions for spares and components to 5% of the free on board value of the articles manufactured for export out of India by the unit during the preceding year. This was earlier at a mere 1.5%.
  • State FMs arrive at CST relief formula : State governments on 16th April/08 finalised a compensation formula for the revenue shortfall after the cut in CST from 3% to 2%, which is likely to come into effect from 1st May, 2008. This may result in Central Government providing around Rs.7000 crore to States in 2008-09. In order to partially offset the loss due to the CST rate cut, the Centre will pass on the service tax collections from 33 services to States
  • Notifications :
    • Policy Circular No.1(RE-08)/2004-2009 dt. 11th April, 2008 : Clarification regarding Service Tax Refund.
  • DEPB Scheme extended till ‘further amendments’ : According to a Public Notice issued by DGFT on 29th March, 2008, the government has extended till further amendments the DEPB Scheme, used by exporters to remit duties on exported products. The scheme was to expire on 31st March, 2008.
  • Govt nod to ITIRs : The Cabinet Committee on Economic Affairs (CCEA) at its meeting held on 3rd April/08 approved the proposal to create Information Technology Investment Regions (ITIRs), which have been conceptualized to boost the growth of IT, IT-enabled services and electronic hardware manufacturing (EHM)units. These regions could include new integrated townships, SEZs and industrial partsm and would also have residential area, social infrastructure and administrative services. These units will be built through the public-private partnership route. State governments will select the deverlopers and co-developers through a transparent bidding process. Each ITIR is expected to be a specifically notified investment region with a minimum area of 40 sq.km planned for IT and Electronics Hardware Manufacturing units. The minimum processing area will be 40% of the total area of the ITIR.
  • Easier FDI norms for SSI likely : In a move aimed at easing the flow of funds to small scale industries (SSIs), the Centre proposes to allow foreign direct investment (FDI) into the sector through the automatic route. The relaxation is in line with the government’s efforts to modernize SSIs, given their huge employment potential. Under existing norms, FDI in sectors reserved for SSIs is currently routed through FIPB and requires prior government permission. Once implemented, regulators such as RBI need be informed of such investments only after they have been made.
  • TRAI abolishes ADC from 1st April, 2008 : In line with its laid down roadmap, Telecom Regulatory Authority of India (TRAI) on 27th March/08 abolished the Access Deficit Charge (ADC) with effect from 1st April, 2008. ADC is the amount payable by private telecom operators to BSNL for sustaining its rural wireline network. The regulator has also slashed the ADC on international long distance calls to 50 paise from Re.1 on incoming calls, which may also be phased out in Sept/08. As a result, a reduction in mobile tariff is expected, as leading telecom operators are expected to pass the benefit to their customers.
  • Govt panel to review duty drawback rates : Faced with the outcry of exporters for relief from the rupee rise, the government has set up a high-level committee for formulation of All Industry duty drawback rates for 2008-09. The 3-member Committee comprises Member, Economic Advisory Council to PM, Shri Saumitra Chaudhury, Secretary in Finance Ministry, Shri SB Mohapatra and Chief Commissioner of Customs & Central Excise (retired), Shri T.R. Rustagi. In this regard, Drawback Directorate has issued letter dated 18th March, 2008 seeking necessary data from the industry. The Comnmittee is expected to submit its report by May.
  • 3-month delay in number portability : The implementation of mobile number portability (MNP) is likely to be delayed by three to six months due to lack of infrastructure. Communication Minister had announced the implementation of MNP by the 4th quarter of 2008. DOT has to form a consortium of operators, which, turn, has to set up a central database of operators and their subscribers. Rules and regulations have also to be formulated and approved by TRAI.
  • DEPB Scheme may get another extention : The duty entitlement pass book (DEPB) scheme is likely to get another lease of life, with the government planning to give one more extension. The scheme is scheduled to expire on 31st March, 2008 and no substitute to the DEPB has been formulated so far.
  • DOT proposes tough rollout obligations for 3G : The Department of Telecommunications, in its guidelines for auction and allotment of spectrum for 3G services, has proposed stiff network rollout obligations for next generation (3G) mobile service providers, failing which they will have to pay a hefty penality for boarding spectrum or the radio frequency.
  • Notifications :
    • Customs Notification No.34/2008 dt. 13th March, 2008 : Imposing anti-dumping duty on imports of Compact Discs-Recordable (CD-Rs) originating or exported from Iran, Malaysia, Korea ROK, Thailand, UAEs and Vietnam. The duty amount ranges from Rs.0.74,Rs.1.11,Rs.2.27,Rs.2.63,Rs.3.04,Rs.3.08, Rs.3.09 & Rs.3.23 per piece, depending upon the country of origin and country of export.
  • Govt to introduce Bank Realisation Certificate Module On Duty Drawback from 1.4.2008 : CBEC has sought comments/suggestions by 26th March, 2008 about the new module being introduced from 1st April, 2008. Details are available on the CBEC website - www.cbec.gov.in
  • Notifications :
    • Customs Notification No.32/2008 dt. 5th March, 2008 : Amending Notification No.69/2004-Customs dated 9th July, 2004 to add S.No.54 (after 53) with description of goods “All goods falling under tariff items 8517 12 10 and 8517 12 90”
    • Public Notice No.122 (RE-2007)/2004-2009 dt. 4th March, 2008 : Through this Public Notice, a subparagraph has been added in Para 3.2.5 III of Handbook of Procedures (Vol.1), so as to provide that licensing authority shall endorse the name of the supporting manufacturer on the certificate as co-licensee. Consequently, listed supporting manufacturers shall be ‘co-licensees’ for DFCE for Status Holders Scheme 2003-04 issued under Para 3.7.2.1(vi) of the Export and Import Policy (RE2003) and duty credit scrips which have been already issued under the scheme shall be deemed to have been amended to this extent..
    • Policy Circular No.31(RE-07)/2004-2009 dt. 29th Feb/08 : Clarification regarding requirement for return of original TR-6 Chalan evidencing payment of customs duty for the excess raw material imported against Advance Authorisation Scheme.
    • Notification No.S.O.246(E) dt. 5th Feb/08 : Notifying the list of 79 de-reserved items for exclusive manufacture in the micro and small enterprise sector (SSI). This list includes : Voltage stabilizers – domestic type upto 5 KVA, PVC wires-domestic type, Exhaust fans upto 460 mm, Electrical light fitting chokes & starters, Amplifiers for entertainment and public address system.
  • FM hints at 14% GST rate : During the post-budget meeting of CII on 4th March/08, Finance Minister P. Chidambaram hinted at a central goods and service tax (GST) rate of around 14%. GST is scheduled to be implemented from 1st April, 2010 and there will be one or more Central and State GST rates for all goods and services.
  • Highlights of Union Budget 2008-09 : The Union Minister of Finance, Shri P. Chidambaram presented the Budget Proposals for 2008-09 in Parliament on 29th Feb/08. The main highlights of the Budget are:
    General
    • GDP Growth rate projected @ 8.7% in 2007-08 compared to 9.6% in 2006-07
    • Avg growth rate in last 4 years is >8.5%
    • Growth in Manufacturing Sector decelerated to 9.4% from an unexpectedly high 12% in 2006-07.
    • Growth in Services sector estimated @10.7 % compared to 11.2% in 2006-07.
    • Emphasis on Inclusive growth, Education, Health and Infrastructure expansion continues
    • Concerns about oil prices and food grain prices, overall inflation and sluggish growth of agricultural output
    • CST reduced to 2% wef 1-4-08 and re-confirmation of movement towards a consolidated GST by 2010.
    • Risk Capital Fund being created in SIDBI for Micro, Small & Medium Enterprises (MSME’s)
    • A non profit corporation to be established to address the challenge of Skill Development required by India’s growing economy (under Skill Development Mission)
    • Few inputs added to Notif 25/99 for zero duty imports and additional inputs for Set Top Boxes brought to zero CD
    • No additional support or consideration for high value added IT/Hardware manufacturing
    • Appreciable increase in Individual Direct Tax Exemption limits
    • No change in Corporate Tax
    Customs Tariff (CT) & Excise Duty (ED) Highlights
    Customs
    • Peak rate of customs duty on non-agricultural products remains at 10%
    • Customs duty on project imports attracting 7.5% has been reduced to 5%.
    • Customs duty on specified convergence products has been reduced from 10% to 5%.
    • Customs duty on specified raw materials and inputs for use in IT/electronic hardware industry has been reduced from 10%/7.5% to Nil, on end-use basis.(Notif no. 25/2008-Cus)
    • Customs duty on specified parts of set-top boxes has been reduced from 7.5% to Nil on end-use basis. (Notif no. 21/2008-Cus)
    • Customs duty on iron or steel melting scrap has been reduced from 5% to Nil.
    • Customs duty on aluminium scrap has been reduced from 5% to Nil.
    • Customs duty on phosphoric acid has been unified at 5% irrespective of its use.
    Central Excise
    • General rate of excise duty (CENVAT) has been reduced from 16% to 14%. The other ad valorem rates of 24%, 12% and 8% remain unchanged.
    • Excise duty has been fully exempted on Wireless data modem cards. Consequently, CVD shall also be exempted on imported cards. 4% additional duty of customs will, however, be applicable.
    • Excise duty has been reduced from 16% to 8% on specified Convergence Products.
    • Excise duty has been increased from 8% to 12% on packaged software.
    • National Calamity Contingent duty (NCCD) at the rate of 1% has been imposed on mobile phones. On imported mobile phones, this duty shall be levied as additional duty of Customs under section 3(1) of the Customs Tariff Act, 1975.
    • National Calamity Contingent duty of 1% currently leviable on Polyester filament yarn has been withdrawn.
    Miscellaneous:
    The rate of duty applicable to clearances of goods to domestic tariff area from export oriented units, software technology parks, electronic hardware technology parks etc. has been revised from ‘25% of the basic customs duty + excise duty payable on like goods’ to ‘50% of the basic customs duty + excise duty payable on like goods’.

    Consequent upon reduction of excise duty rates on specified goods leviable to excise duty on retail sale price basis, abatement rates for such goods have been revised suitably.
    • Economic Survey push for reforms :The annual Economic Survey for 2007-08, presented to the Parliament on 28th Feb/08 by the Finance Minister, indicates that India’s economy has moved to a higher growth trajectory, but sustaining the momentum requires bold policy moves. Coming at a time of turmoil in global financial markets, the Survey warned of possible spike in inflation and how it could make the task of sustaining growth even more duating. The new challenge is to maintain growth at these levels, not to speak of raising it further to double digital levels. After tabling the Survey in Parliament, the Finance Minister said “Optimisium with caution” would be the watchword for 2008-09. The Survey indicates : Economic Growth of 8.7% against 9.6% in 2006-07, Inflation rate to decline ffrom 5.6% in 2006-07 to 4.4% in 2007-08, Exports reach $111 billion in first 9 months of 2007-08, Imports grow 25.9%, FDI inflows reach $11.2 billion.
    • Highlights of Railway Budget for 2008-09 : Some of the main features of the Railway Budget announced by the Railway Minister Shri Lalu Prasad, on 26th Feb/08, are : No hike in freight rates, 5% reduction in petrol & diesel rates, freight loading target upped by 7.6% to 850 mt in 2008-09, Railways to use PPP route to attract Rs.1 lakh crore investment, AC & 2nd class fares reduced Booking through mobiles, e-tickets for waitlisted passengers, Rs.75,000 crore for infra upgration, 20,000 new wagons by 2009, plans to upgrade railways with new technologies..
  • Notifications :
    • Notification No.29/2008-Customs dt. 1st March, 2008 – Imposing 1% NCCD as Central Excise on mobile phones manufactured in India and as additional customs duty on imported mobile phones.
    • Notification No.25/2008-Customs dt. 1st March, 2008 : Reducing customs duty on specified raw materials and inputs to Nil by adding to Notfin No.25/99
    • Notification No.21/2008-Customs dt. 1st March, 2008 : Reducing customs duty on specified parts of set top boxes from 7.5% to Nil on end-use basis.
    • Public Notice No.113 dt.15-2-2008 : Amending Appendix 17D and Paras 3.2.5.III & 3.2.5.VII of Handbook of Procedures for Target Plus Scheme 2004-05 & 2005-06.
    • Public Notice No.111 dt.15-2-2008 : Procedure amended for DFCE & Target Plus Scheme for status holders.
    • Public Notice No.106 dt. 6-2-2008 : Amending the procedure for claiming duty credit scrip under Target Plus Scheme 2004-05 in terms of para 3.2.5(III) of the Handbook of Procedures (2004-2009), Vol.1 (revised edition 2004) to support manufacturers.
  • Govt extends the tax refund scheme for 3 more services and approves Rs.500-crore interest subvention package to help exporters : The Finance Ministry, through Notification No.3/2008-ST dt.19th Feb/08, extended the service tax refund scheme for exporters to three more services – for transporting goods from a factory/other premises to the actual place of export, rail transport for moving export goods in containers to the place of export and courier services for transporting export-related items to foreign destinations. With this, 13 services used by exporters have been made eligible for refund of the tax liability.
    On 21st Feb/08 the government also approved a Rs.500 crore additional package in the form of interest subvention for exporters to compensate them for the reduction in profits due to rupee appreciation against the US dollar. The interest subvention is subject to the condition that interest rate on loans will not fall below 7% - rate applicable under priority sector lending scheme. Earlier, the government had announced Rs.300 crore under this scheme.
  • DOT approves TRAI’s reco to share active infrastructure by service providers : In a move that will help Telcos lower tariffs and reduce overall expenditure by well over 50%, the Department of Telecom (DoT) has approved TRAI’s recommendation to let service providers share active infrastructure. Indian telecom companies are permitted to share only passive infrastructure, such as towers, repeaters, shelters and generators. Active infrastructure sharing will allow operators to use all key electronic components, including antennas, feeder cables, nodes, radio access network, transmission systems and backhaul. New entrants will be able to use set-up of existing players and launch services within a short span.
  • Notifications :
    • Notification No.3/2008-ST dt. 19th Feb/08 – Extension of service tax refund for 3 more services.
    • Customs Circular No.4/2008 dt. 12th Feb/08 – Regarding Valuation practice of second hand machinery to be adopted by all Customs Houses/Customs Commissionerates.
  • Manufacturing Panel seeks sops : The Prime Minister’s Panel on manufacturing sector is understood to have suggested urgent fiscal measures in the Budget to reverse deceleration in growth in several sectors. The high-level committee, headed by Chairman of the National Manufacturing Competitive Council (NMCC), Shri V. Krishnamurthy, has submitted its report to the PMO, and the recommendations are likely to be implemented in the Budget. The PM has constituted the Committee in the wake of weaknesses witnessed in the manufacturing sector. Besides suggesting short-term steps, the Committee was mandated to recommend long-term measures to ensure that the factory sector continues to grow fast in the nxt 10 to 15 years. Growth in the industrial production plunged to 5.3% in November this fiscal from 15.8% in the comparable period of 2006-07 following a sharp decline in the manufacturing sector. The six core infrastructure industries also declined to 5.3% in Nov. 2007 from 9.6% and to 7.6% in Dec/07 from 13.4% a year ago. The manufacturing sector has over 80% weightage in the overall industrial production.
  • 79 items de-reserved in small scale sector : The government has excluded an additional 79 items from a list of 114 items which can be exclusively manufactured in the small scale sector. With this de-reservation, only 35 items can be manufactured in the SSI sector. The government has been de-reserving items in gradual and calibrated manner to increase competitveness of the industry, facilitate adequate flow of credit and upgrade technology. The move would also enable the Indian industry to compete with imports, achieve economies of scale and create job opportunities.
  • Notifications :
    • Policy Circular No.29(RE-07)/2004-2009 dt. 6th Feb 2008 : Clarification regarding clubbing of Advance Authorisations under paragraph 4.20 of HBP Vol.1.
    • Customs Notification No.14/2008 dt. 4th Feb. 2008 : Further amending S.No.14, in col.(3) in the Explanation, in Not. No.39/96-Customs dt. 23rd July, 1996.
  • Govt plans to restrict cheap imports : In a long overdue move that is expected to cheer the domestic industry complaining of facing onslaught from cheap imports, the government is set to arm itself with powers to ipose quantitative restrictions (QRs) to bar import of these items. The initiative, first-talked about in 2000 when import curbs were lifted is once again beibng pushed through amendments to the Foreign Trade (Development and Regulation) Act. The Commerce Ministry, which is piloting the Bill, would be empowered to initiate investigation on items where is a spurt in imports and “threaten to cause serious injustry to domestic industry”. As a part of flexibility being offered to developing countries, the government can restrict import of a particular item from a developing country if its share in total Indian imports exceeds 3%.
  • RBI’s Monetary Policy – Rates unchanged : The Reserve Bank of India, in its third-quarter review of the Annual Statement on Monetary Policy 2007-08 on 30th Jan/08 took a neutral stance, leaving the bank, repo and reverse repo rates as well as the CRR unchanged. The Central Bank also gave sufficient indication that it was according priority to anchoring inflation and it was closely monitoring the liquidity overhang. RBI retained the bank rate and reverse repo rate at 6%, Repo rate at 7.75% and cash reserve ratio (CRR) at 7.50%.
  • Notifications :
    • Notification No.72(RE-2007)/2004-2009 dt. 22nd Jan/08 : Making amendment in the provision for Exit from EOU Scheme (Para 6.18 of FTP 2004-09), replacing the existing para 6.18(d) by the following:-
      "An EOU/EHTP/STP/BTP unit may also be permitted by Development Commissioner, to exit from the scheme on payment of duty on capital under the prevailing EPCG Scheme for DTA units. This will be subject to fulfillment of positive NFE criteria under EOU scheme, eligibibility criteria under EPCG Scheme and standard conditions indicated in HBP V.1".
      (Existing para 6.18(d) : “An EOU/EHTP/STP/BTP unit may also be permitted by Development Commissioner, to exit from the scheme on payment of duty on capital under the prevailing EPCG Scheme as a one time option. This will be subject to fulfillment of the eligibility criteria under that scheme and standard conditions indicated in Handbook (Vol-1)”.
    • Policy Circular No.28/07 (2004-2009) dt. 22nd Jan/08 : Explanatory note to Public Notice No.99 (RE-2007) dt. 8.1.2008
    • Central Excise Notification Nos.03/2008-NT and 04//2008-NT, both dt. 18th Jan/08 : Amendments in Central Excise Rules.
  • Govt introduces Abatement Rates for IT products : While announcing the abatement rates for various items through a notification issued by CBEC, the government has introduced Maximum Retail Price based taxation for various IT related products, including Computers, Modems and Set Top Boxes. Accordingly, the excise duty on these products will be levied on the basis of retail sale price with effect from 25th January, 2008.
  • Peak customs duty likely to stay due to poor exports : Peak customs duty, which stands at 10%, is unlikely to be cut in Budget 2008 following a slow down in the manufacturing sector and negative growth in labour-intensive exports. The target is to cut to 4.5-5% by 2010.
  • Govt mulls another round of export sops : The government is considering another set of measures – the fourth in 2007-08 – to help exoporters cope with a rupee that has strengthened 13% since April, 2007. The measures include Capital Goods imports through EPCG Scheme at zero duty. These measures are part of a package of nine concessions that were suggested by the Commerce Ministry around eight weeks ago and are awaiting Cabinet approval.
  • DOT rolls out revised spectrum policy : On 18th Jan/08, the Department of Telecommunications (DOT) came out with a revised spectrum-linked policy to GSM operators which is in line with the recommendations of the TRAI. The new policy is with immediate effect.
  • TRAI for 74% FDI in Mobile TV services : Broadcast regular TRAI has proposed 74% Foreign Direct Investment (FDI) in mobile television services and favoured bidding for allocation of licences for this service. Mobile TV services are current available in parts of Europe, US, South East Asia and Japan among other developed countries.
  • Notifications :
    • Excise Notification No.05/2008-Central Excise (N.T.) & No.06/2008-Central Excise (N.T.), both dated 24th Jan, 2008 : Introducing Abatement Rates from 25th Jan/08.
    • Policy Circular No.27(RE-07)/2004-2009 dt. 17th Jan, 2008 : Validity of Registration-cum-Membership Certificate (RCMC) and Councils authorized to issue RCMC.
    • Public Notice No.102(RE2007)/2004-09 dt. 16th Jan. 2008 : Amendments in the Handbook of Proceudres (Vol.1), (RE-2007), para 8.3.1(ii) and (iv).
    • Customs Notification No.10/2008 dt. 15th Jan, 2008 : Reducing customs duties on imports from Singapore on some items falling under Tariff 85.
  • Notifications :
    • Public Notice No.100(RE-2007)/2004-2009 dt. 10th Jan, 2008 : Amending the following paras in Handbook of Procedures, Vol.1(RE2006 & RE2007):- (A) Para 3.21.1 for Focus Product Scheme Replacement, (B) Para 3.22.2 for High-Tech Products Export Promotion Scheme Replacement, (C) Revised ANF 3E for Focus Product Scheme as annexed to the Public Notice, and (D) Para 3.20.1 for Focus Market Scheme Replacement.
    • Policy Circular No.26(RE-2007)/2004-2009 dt. 9th Jan/08 : Export of restricted/prohibited items, clarification regarding eligibility under Schemes under Chapter 3 of FTP 2004-09.
    • Customs Circular No.1/2008 dt. 9th Jan/08 : Allocation of Work relating to Trade Facilitation. Authorising DGEP (Directorate General of Export Promotion) to look after the work relating to 100% EOUs, SEZ, STPI and EHTP etc.).
    • Notification No.2/2008,F.No.149/278/2006-TPL dt. 8th January, 2008 : Amendments in Income Tax Rules, 1962 regarding eligibility of Industrial Parks for benefits under section 80-1A(4)(iii).
    • Public Notice No.99(RE-2007)/2004-2009 dt. 8th Jan/08 : Amendment in Handbook of Procedures, Vol.1(RE-2007), adding the following at the end of paragraph 5.7.4 “Additional Export Obligation (over and above indicated average) for all previous EPCG licences, which have not been redeemed, will be indicated separately”.
    • Public Notice No.97(RE-2007)/2004-09 dt. 4th Jan/08 – Amending Para 2.59.2 of Handbook of Procedures, Vol.1, regarding list of Agencies authorities (for ISO-9000 and ISO-14000 (Series) to grant quality certification.
  • 10-year tax holiday to jack up manufacturing : In a much-needed pre-budget bonanza to the manufacturing sector, which is showing signs of decleration, the government on 10th Jan/08 extended tax benefits to industrial units under a new Industrial Park Scheme, 2008. The scheme would provide a 10-year tax holiday under Section 80-IA (4)(iii) of the Income Tax Act, 1962. It extends a 100% IT rebate for 10 years to any undertaking, which has developed an industrial park between April 1, 2006 and March 31, 2009. All such industrial parks will have to take approval fro CBDT before availing of the tax breaks.
  • Target Plus Scheme gets tougher : In an effort to prevent misue of the Target Plus Scheme, the Central Board of Excise & Customs (CBEC) has issued fresh guidelines to tighten the noose on exporters using the scheme to evade duties. Only those goods imported by the exporter which fall under SION or have a ‘broad nexus’ with the final product would get benefits under the Scheme. Alternatively, it must be registered under the Scheme as inputs, capital goods, including spares, office equipment, professional equipment and office furniture by an importer for his own use or for the use of his supporting manufacturer(s), as declared in the Aayat Niryat Form.
  • Hardware, software makers may soon be able to invest in SEZs : Electronics hardware and software companies may soon be cleared to invest in SEZs and integrated townships. Plans to build integrated townships of up to 40 sq.km in area would keep the cost-competitiveness of the IT sector going even after the tax breaks offered under the STPI scheme come to an end in 2009. Mega-cities plans have been drawn up by the Department of Information Technology and identified as IT investment region. According to sources, the idea of developing a region jointly for the hardware and software sectors was mooted by the PMO after recommendations from industry bodies.
  • Notifications :
    • Policy Circular No.24(RE-2007)/2004-2009 dt. 1st Jan 2008 : Clarification regarding Merger(s) and Acquisition(s) of companies and/or firms during 1.4.2002 to 31.3.2006 and consequential grant of benefits under DFCE for Status Holders’ Scheme of the then EXIM policy and under Target Plus Scheme of Foreign Trade Policy.
    • Public Notice No.94(RE-2007)/2004-2009 dt. 1st Jan 2008 : Amendments in Foreign Trade Policy Hand Book of Procedures (Vol-I), adding the following at the end of paragraph 5.7.2 : "Export of SEZ units/supplies to Developers/Co-developers irrespective of currency of realization, would also be counted for discharge of Export Obligation".
    • Customs Circular No.45/2007 dt. 19th Dec/07 : Regarding Scope and Coverage of Goods to be imported under Target Plus Scheme (TPS).
  • Keep FDI cap on mobile TV at 74%,TRAI : Telecom Regulator TRAI on 3rd Jan/08 proposed that the government allow players to offer mobile TV services using any technology of their choice, and licences for this service be issued ‘through a closed tender system on the basis of a one-time entry fee (OTEF) quoted by the bidders’. TRAI has also recommended that the FDI in this sector be kept at 74% in line with the telecom sector. It also proposed that allocation of spectrum to mobile television licensees should be automatic for successful bidders and it should not require any further selection process.
  • Notifications :
    • Notification No.45/2007-Service Tax dt 28th Dec/07 : Sixth Amendments in the Service Tax Rules, 1994.
    • Notification No.42/2007-Central Excise (N.T.) dt. 27th ec/07 : Making the Central Excise (Compounding of Offences) Rules, 2005 more stringent.
  • States to collect tax under GST from 2010 : The Empowered Committee of State Finance Ministers has submitted its draft GST roadmap to the Union Cabinet for consideration next month. According to the draft recommendations, from 2010 onwards, the Central Government will levy and collect GST (Goods and Service Tax) on all India services like banking, insurance and telecom. In effect, Stastes will collect both Central GST and state GST on intra-state services, while the Central Government will collect both taxes on inter-state services. The states will transfer the Centre’s share from their collections as per the Central GST rate on services. The Centre will do the same while transferring states share in tax on services.
  • 24% investment cap on SSIs removed : In a development which is likely to increase participation of foreign players and big companies in small scale industries (SSIs), the government has formally announced doing away with the 24% investment cap in the sector. Announcing the development, the Commerce Minister, Shri Kamal Nath expects that this will lead to technology infusion in the sector as more and more foreign players and large companies set up their own SSI ubnits. An industrial unit is classified as an SSI when the investments is within Rs.5 crore.
  • Notifications :
    • Customs Circular No.42/2007 dt. 30th Nov/07 – Regarding grant of exemption from furnishing Bank Guarantee by Central/State Government Undertakings for inter-city transfer of goods from one bonded warehouse to another.
    • Circular No.860/18/2007-CX dt. 22nd Nov/07 – Making mandatory self-sealing of containers of export goods.
  • The government is set to remove the current foreign direct investment (FDI) cap of 24% for all companies in the small-scale industry (SSI) sector. SSI units will be allowed to raise foreign equity in accordance with caps governing the sectors in which they operate. According to newspaper reports, the idea is that SSI units must have access to technology and capital.
  • Commerce ministry readies impact check for FTAs Responding to the increasing political resistance to trade liberalization, the Commerce & Industry Ministry is planning to set up a special mechanism to monitor the impact of free trade agreements (FTA). Academic institutions like IIFT and RIS would be assigned the task of analyzing the impact of FTAs while the commerce department would put up a quick-response system to negate any adverse impact on India Inc. The move is significant since the domestic industry has been facing increased competition from overseas due to liberal imports
  • Appropriate authority for sanction and disbursement of drawback claims on supplies made by Domestic Tariff Area (DTA) units to units located in Special Economic Zone (SEZ) Doubts were raised as to whether the jurisdictional commissioners or Customs or Central Excise can sanction drawback claims against supplies made by DTA units to units in SEZ. According to Customs Circular No. 43/2007 dt. 5th December, 2007, it was clarified vide board’s circular No. 6/2005-Cus, dated 3.2.2005 that with operationalisation of the provision of Chapter X-A of the Customs Act, 1962 w.e.f. 11.5.2004, drawback is to be granted for the supplies made from the DTA to SEZ being the Dy./Asstt. Commissioner of Customs at the Customs Station of export shall be the authority for granting these drawback.
  • DEPB may stay: Fresh reports indicates that DEPB scheme may not be replaced with duty drawback scheme if the finance ministry doesn’t agree to remit state taxes paid by exporters. The Commerce Department is of the view that with steadily appreciating rupee, exporter can stay competitive only if all input taxes like octroi, electricity tax, mandi tax, sales tax on petroleum products and municipal cess are reimbursed .
  • Crucial administrative matters of special economic zones (SEZs) dedicated to the information technology sector will now be handled by directors of the Software Technology Parks of India (STPI), an autonomous body under the department of Information Technology (DIT).
  • India to cut tariff on 555 products from Singapore : Taking the currently operational India-Singapore Comprehensive Economic Cooperation Agreement (CECA) forward, the Union Cabinet on 30th nov/07 approved tariff elimination as well as reduction in additional 555 products. This will benefit exporters from Singapore. The Singapore CECA, signed in June 2005, was the first of its kind agreement that India signed with any country. The agreement not only entails duty cuts and reduction in duties on goods but also focuses on ways and means to increase trade in services as well as facilitation of investments. According to experts, more than trade in goods, India stands to gain from the services and investments components of the agreement. The decision also includes a clause that any additional benefits extended to the Asean FTA (of which Singapore is a member) in the future will also be extended to Singapore.
  • TRAI likely to implement CAC; choose your operator for making STD/ISD calls: Telecom subscribers would soon have the option of choosing long distance operators for making ISD and STD calls. The Telecom Regulatory Authority of India (TRAI) is likely to implement the much-delayed carrier access code (CAC) shortly. The move comes after recent DoT’s decision to implement mobile number portability. Once CAC is implemented, the subscriber of one operator can use the network of any other operators of their choice to make STD/ISD calls by dialing a prescribed code. This empowers consumers with more choice and brings about more competition in the long distance call rates.
  • States agree to dual GST by 2010 : A key milestone towards indirect tax reform in the country was achieved on 28th Nov/07 when the Empowered Committee of State Finance Ministers agreed to recommend to the Central Government for adoption of a nationwide dual Goods and Service Tax (GST) from April 01, 2010. The dual GST will operate at two levels – the Central and States. The tax rate is yet to be finalized. The dual GST model is expected to reduce the incidence of indirect taxes on products and services.
  • Notifications:
    • Central Excise Circular No.860/18/2007-CX dt. 22nd Nov/07 : Regarding Self-sealing of exports goods.
  • FDI in cable TV set to touch 74% : The government is all set to allow 74% foreign direct investment (FDI) in cable services and head-end in the sky (HITS) – a satellite-based system to distribute TV signals via cable – while also permitting 100% FDI in downlinking of general and entertainment channels uplinked from abroad. The move will eventually intensify competition in the telecom sector, particularly when convergence of telecast distribution, telecom and broadband becomes a reality.
  • Notifications:
    • Central Excise Notification No.39/2007 (N.T.) dt. 13th Nov/07: Amending the CENVAT Credit Rules, 2004, adding a provision after the second proviso, in rule 3, sub-rule (5).
  • Supreme Court cancels extra duty on Laptops : In a recent judgment, the Supreme Court has held that the government cannot levy an additional 7% customs duty on Notebook PCs (laptops) as in the case of desktop computers, since the two are totally different though capable of performing similar functions. Notebook PC being an integrated item cannot be a set of a CPU with monitor, mouse and key board.
  • Exporters won’t need multiple accounts to get drawback : In a meeting on e-commerce convened by the Department of Commerce on 5th Nov/07, which was attended by exporters and representatives from other departments and ministries concerned, the government is understood to have agreed to do away with rules requiring exporters to open bank accounts at every port or airport from which they export in order to obtain input tax reimbursements under the drawback scheme. Accordingly, they would now be required to open just one account with a nodal bank, nominated by the Customs Department, where the drawback payments for all exports made by them from various locations would be credited.
  • RBI announces mid-term Monetary Policy on 30th Oct/07 with GDP growth at 8.5% : The Reserve Bank of India, on 30th Oct/07, announced its mid-term Monetary Policy, with its GDP growth projection unchanged at 8.5%. Major measures announced include an increase in Cash Reserve Ration by 0.5% to 7.5%, Corporates allowed to write currency options, Financing of RRBs to invest in IT & Communications, RBI to provide IT support to cooperative banks etc.
  • Notifications:
    • Custosm Circular No.41/2007 dt. 29th Oct/07 – Regarding instructions for implementation of Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.
    • Public Notice No.74(RE-2007)/2004-2009 dt. 24th Oct/07: Regarding Guidelines for conversion of DTA unit into EOU/EHTP/STP/BTP unit and attaching Appendix 14-1-O, as Annexure to the Public Notice.
  • DoT makes it tougher for cos to get spectrum : The Department of Telecom (DoT) on 20th Oct/07 announced a set of rules for granting telecom licences and allocating spectrum that is likely to impact GSM technology service providers like Bharti Airtel, Vodafone Essar etc. DoT’s new policy accepts the recommendations of the TRAI on enhancing the minimum number of subscribers required by existing operators to qualify for additional spectrum. However, the final norms in this regard will be decided by DoT after it receives a report from the Telecom Engineering Centre, which is to finalise enhanced user base criteria. The policy has also delinked the unified access service licence (UASL) from spectrum allocation.
  • New Hardware Policy in 3 weeks : According to a statement in the newspapers on 13th Oct/07 by the Addl Secretary, DIT, Mr. M. Madhavan Nambiar, the Centre is revising the hardware manufacturing policy to synergise it with the national semiconductor policy. The new policy, which is likely to be announced in 2-3 weeks, would cover all aspects, including tariffs, R&D and incentives, keeping in mind the package announced for the semiconductor industry announced earlier this year. Stating that infrastructure was a crucial input in attracting investments to these sectors, Mr. Nambiar said the Centre was keen on promoting Information Technology Investment Regions, spread over 50 to 60 km radius. The regions, to be developed in collaboration with the States, will have world-class infrastructure.
  • Telecom Sector to get dedicated satellite : The Telecom Commission has approved DOT’s proposal to have an independent, dedicated satellite for telecom services. The project, which is estimated to cost $500 million, is likely to be awarded to ISRO. DOT has been asked to work out the finer details of developing the satellite, which will largely cater to BSNL which has been entrusted with the task of executing most of the government’s rural programmes.
  • Notifications:
    • Customs Circulars No.37 & 38/2007 dt. 9th Oct/07 : Customs Valuation (Determination of value of export goods) Rules, 2007 – Instructions Reg.
    • Customs Circular No.39/2007 dt. 9th Oct/07 – Regarding exemption from filing supplementary claim in respect of increase in drawback rates with retrospective effect from 1.4.2007.
    • Notification No.36(RE 2007)/2004-2009 dt. 8th Oct, 2007 : Amending paragraph 5.4(i) related to Export obligation under EPCG scheme by the following clause : “Export obligation shall be fulfilled by export of goods manufactured/services rendered by the applicant. Export obligation under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for the same and similar products within the overall export obligation period, including extended period, if any, except for categories mentioned in paragraph 5.7.6 of Handbook of Procedures, Vol.I. Such average would be the arithmetic mean of export performance in last three years for the same and similar products.
  • Exporters to get additional duty drawback sans fresh paperwork : In a move that will expedite payment of pending drawback amount to exporters, the Finance Ministry is reported to have agreed to provide additional duty drawback announced in June 2007 without insisting on submission of fresh documents. Revenue Department would not insist on supplementary documents in case of shipments cleared through electronic data interchange (EDI) system and use EDI database data for additional entitlement calculation. In the case of non-EDI shipping bills, exporters may still have to submit papers.
  • Notifications:
    • Public Notice No.56(RE-2007)/2004-2009 dt. 1st Oct/07 : Amendments in Handbook of Procedures, V.I, paragraph 4.46 related to “Time period” for filing DEPB application.
    • Public Notice No.54(RE-2007)/2004-2009 dt. 1st Oct/07 : Amendments in Handbook of Procedures, V.I, paragraphs 5.3.1, 5.3.2, 5.8 (related to ‘Fulfillment of Export Obligation’), 5.8.1, 5.8.2, and 5.8.3
    • Policy Circular No.13(RE-07/2004-2009 dt. 1st Oct/07 : Clarification on the availability of benefit of DFIA scheme for physical exports to RPA countries, as per paragraph 4.1.6 of FTP.
    • Policy Circular No.12(RE-07/2004-2009 dt. 1st Oct/07 : Clarification on the facility of Export Promotion Schemes administered by DGFT.
  • Single-window clearance for IT Hardware manufacturers : According to a statement by Department of Information Technology (DIT), the government is considering a proposal to allow single window clearance at the Centre, State and Municipal level for electronics and IT hardware manufacturers, a move that is expected to induce more investments in the sector. The proposal initiated by DIT has got a strong support from the task force on promoting growth of electronics and IT hardware industries headed by the Principal Secretary to the Prime Minister. DIT is in consultation with the Commerce and Finance Ministries for chalking out the final cource of action. The proposals include procedural simplification for setting up a unit, approval based on self declaration, import and export facilitation and infrastructure support for the sector. The move is saimed towards attracting multi-billion dollar investment in the IT hardware manufacturing sector, which, according to industry estimates, is expected to become a $155-billion industry in the next couple of decades from $43 billion now. The figure is exclusive of the consumer electronics sector which contribute about 35% of the total electronics hardware production in India and Colour TVs are the largest contributor to this sector.
  • New Finance Panel to draw GST road map : The government has clearly signaled its commitment to bring in a Goods & Services Tax (GST) at the Centre and states by 2010. It has decided to mandate the 13th Finance Commission to prepare a road map for the introduction of GST. The Panel, to be appointed soon, is expected to give its award by the middle of 2009
  • Notifications:
    • Public Notice No.53(RE-2007)/2004-2009 dt. 27th Sept/07 : Deleting Condition for fulfillment of Export Obligation under EPCG Scheme (Paragraphs 5.7.8 and 5.8.6 in the Handbook of Procedures, Vol.1)
  • DIT pushes for tax sops to IT firms : In what may bring some cheer to infotech companies, the Department of Information Technology (DIT) has begun the process of seeking Capbinet approval for extending tax benefits for the sector beyond April, 2009. The benefits are available to EOUs and STPIs and expire on 31st March, 2009.
  • No easy entry for cheap optical discs : Directorate of Anti-dumping & Allied Duties under Ministry of Commerce plans to expand the scope of anti-dumping duty on imported optical discs by making it applicable to imports from five more countries, namely Malaysia, Korea, Thailand, UAE and Vietname. Earlier, the government had imposed anti-dumping duties ranging from Rs.2.24 per unit to Rs.4.20 per unit on import of compact discs recordable (CD-R) from China, Hong Kong, Singapore and Taiwan. The move is expected to help Indian CD manufacturers (like Moser Baer) expand their production capacities over the next year, and would also spur investment in manufacturing of related IT peripherals such as mouse, keyboards snd speakers.
  • Fresh DOT guidelines for screening licence applications : The Department of Telecommunications (DOT) has decided to set up a Committee to lay down guidelines for scrutiny of companies seeking unified assess service licence (UASL). The guidelines are expected to be ready in the next ten days. The DOT has fixed October 01 as the deadline for applying for UAS licence
  • Guidelines for the Semiconductor Policy issued : The Government on 14th Sept/07 issued guidelines for the semiconductor manufacturing policy, which will enable companies to roll out their investment plans. The guidelines define fab unit, eco-system unit, state-of-the-art technology, net present value (NPV), financial closure, capital expenditure and threshold limit for companies to apply for the special incentive package. Under the package, a company investing $550 million for a fab unit and $220 million for other products such as micro and nanotechnology products, will be eligible for incentives upto 20% of capital expenditure during the first 10 years if unit is in an SEZ and 25% if it is located outside an SEZ. To avail the sops, investors would have to submit proposals, along with a feasibility report, to an appraisal committee, chaired by the Additional Secretary in DIT, after paying an non-refundable application fee of Rs.25 lakh. According to the guidelines, only technologically sound projects would be eligible for the package and investors who can attract further upstream or downstream investments would be encourages. Investments made before the date of receipt of applications and investment in land made more than six months before the date of receipt of application shall not be considered for calculation of capital expenditure. While the appraisal committee would, on the basis of the material and advice available on record, make recommendations to the Central government, approval of the project under the package would vest with the government.

    Companies planning fab plants (factories to produce raw silicon wafers with chips) for the electronics industry and solar photovoltaics (for solar energy generation) projects can now formally apply for concessions under the policy. As per the guidelines now issued, companies like SemIndia, HSMC, Signet Solar and Moser Baer etc. are going ahead with their investment plans already announced. According to IT advisory firm Gartner, the total electronic equipment production in India will reach $32 billion in 2011, compared with $14 billion in 2006, a CAGR of 18%. Semiconductor consumption in India will more than double from $2.8 billion in 2006 to $7.2 billion in 2011.

  • Duty-free scrips may replace DEPB : In a move that could boost profitability of exporters, the government is considering issue of duty-free scrips to offset various state-level taxes. The levies include sales tax on petroleum products, CST, electricity duty, octroi, mandi fees, purchase tax, development tax and toll tax. The Commerce Ministry, in a Cabinet note on the proposed replacement for DEPB scheme, has also recommended that the education cess and similar levies should also be neutralized through the proposed duty-free scrips, which can be used by exporters to pay customs duty on imported inputs. Exporters could save up to 4% of the value of their exports through the new instrument and this would provide a much-needed boost at a time when the rising rupee has made competition stiffer in the global markets. The drawback scheme currently offers cash reimbursement to exporters for taxes paid by them to the Centre, such as Customs or Excise. The Commerce Ministry feels a constitutional amendment should be carried out to facilitate reimbursement of state-level taxes. Then the DEPB scheme could be wound up, introduce duty free scrips and drawback could function as a single window facility. The new system, if cleared, would be in operation till March 2010. If GST is introduced by 2010, there will be no need to reimburse state taxes separately.
  • Finance Ministry brings down customs duty on LCD Monitors and Digital cameras by changing classification: A change in classification of gadgets and comper peripherals by the government will make digital cameras and LCD monitors cheaper by at least 10%. The Finance Ministry has issued a circular, relenting to the long demand of the IT industry, to classify LCD monitors as "Computer Monitors" (rather than TV) and Digital Cameras as "Still Image Cameras" (rather than Video Camcorders). It will bring down the customs duty on these products from 10% to zero. LCD Monitors were earlier classified as LCD TVs, which attracted a 10% customs duty in contrast to LCD Monitors which attract zero customs duty. A 16% excise/CVD, however, remains common across both products.
  • Govt allows duty refund of 4% additional customs duty on electronics : The Finance Ministry has notified a scheme to refund the 4% additional customs duty paid on imported goods like electronic items, which is expected to make such imports cheaper. Trades who import goods for sale have to pay both sales tax and the additional duty, a sort of double taxation. Prior to this, the effective tax liability, including basic customs duty on imported goods, was around 34%. The Finance Ministry has now said that traders/importers will get a refund for the 4% duty paid with effect from 14th Sept/07, after submission of necessary documents like proof of payment of sales tax/VAT/invoices of the sale of imported goods etc.
  • Fresh customs valuation norms in step with WTO : Reflecting changes in the international economic scenario, the Finance Ministry on 14th Sept/07 notified the new customs valuation norms. The new rules, which will be used to calculate the customs duty on for both imported and exported goods, are coppletely different from the existing provisions and have introduced varied valuation norms for various kinds of imports and exports. These rules will replace existing provisions of 1988 and comes into force from 10th oct, 2007.
  • Notifications:
    • Notification No.102/2007-Customs dt. 14th Sept/07 : Regarding exemption of additional customs duty
    • Notification No.35/2007-Central Excise (N.T.) dt. 14th Sept/07 &
    • Notification No.36/2007-Central Excise (N.T.) dt. 14th Sept/07 : regarding Amendments in Cenvat Credit Rules 2004
    • Notification No.95/2007-Customs (N.T.) dt 13th Sept, 2007 : Regarding the Customs Valuation (Determination of Value of Export Goods) Rules, 2007.
    • Notification No.94/2007-Customs (N.T.) dt 13th Sept, 2007 : Regarding the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
    • Customs Circular No.32/2007 dt. 10th Sept/07 - Classification of Digital Still Image Video Camera
    • Customs Circular No.33/2007 dt. 10th Sept/07 - Classification of Digital LCD/Flat Panel Monitor
    • Notification No.27(RE-2007)/2004-2009 dt. 7th Sept/07 - Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) export of which is regulated
  • ESC seeks extension of tax sops beyond March 2009 : In an attempt to help the small and medium enterprises, the Electronic and Software Export Promotion Council (ESC) is lobbying for extension of tax sops beyond March 2009. According to Mr. Sanjiv Narayan, Chairman, ESC, about 12,000 SMEs in software and electronic hardware sectors will be impacted with the impeding removal of tax sops for STPI registered firms in March 2009. Mr. Narayan further said that withdrawal of tax benefits under Section 10A and 10B will affect the headstart that Indian companies have gained especially the SMEs. ESC wants sops to be extended for at least five years.
  • Semiconductor Policy guidelines to be announced soon : According to a source in the Ministry of IT, the much awaited guidelines on the semiconductor policy, expected to bring in investment worth billions of dollars, is likely to be announced soon. The guidelines would help Intel, Siemens, Texas, Videcon, Moser Baer and others to firm up their plans to set up semiconductor manufacturing facilities in India.
  • Notifications:
    • Customs Circular No.31/2007 dt. 29th Aug/07 : Issues concerning Import & Export through Courier Mode
    • Customs Circular No.26/2007 dt. 20th July/07 : Waiver of interest on goods cleared from a warehouse when duty is paid by way of debite in DEPB licenses.
  • Finance Ministry may make extra duty drawback automatic : Exporters hit by the appreciating rupee may not have to file supplementary claims to get the additional benefit of the increase in duty drawback rates. The Finance Ministry is likely to disburse the benefits through an automatic mechanism, a move that will save time and reduce transaction costs for exporters.
  • DEPB rate hike to be reviewed : The hike in the DEPB scheme announced by the Commerce Ministry in July 2007, is being reviewed after stiff opposition by the Finance Ministry. The review is to be completed in three weeks.
  • Mixed bag in TRAI review of telecom licensing norms : In a comprehensive review of telecom licensing norms aimed at dismantling barriers to competition, the Telecom Regulatory Authority of India (TRAI) on 29th Aug/07 suggested the following:
    • Licensee to be allowed to acquire 20% stake in rival operator within the same circle
    • Removal of the current 15 MHz spectrum cap on the merged entity
    • Number of telecom service providers in a circle left uncapped
    • Clearance upto 10% acquisition automatic, beyond that on case-by-case basis
    • Combined market share of merged entity to be 40%, down from present 67%
    • Operators to pay one time charge for additional spectrum beyond 10 MHz
  • Notifications:
    • Policy Circular No.04 (RE-2007)/2004-09 dt. 16th Aug/07 : Transitional Arrangements under Para 1.5 of Foreign Trade Policy, 2004-2009.
  • TRAI to dial for unlimited mobile players : In its next stage of licensing reforms, which will determine the future of Indian telecom, the Telecom Regulatory Authority of India (TRAI) is set to recommend removal of cap on the number of players, allowing both CDMA and GSM services under the same licence, and easing of merger and acquisition norms. TRAI's recommendations may come under severe criticism from the GSM players and will further open up the world's most competitive telecom sector
  • Duty on ICs chipped to zero to check Chinese imports : Through notification dated 8th Aug/07, the government, in a damage control exercise, has reduced the duty on ICs from 4% to zero. With a high central value added tax (Cenvat) overflow, most motherboard manufacturers in India had started importing motherboards from China and stopped manufacturing them in India. The notification aims to stop that. ICs are used in every electronic device - TVs, mobile chipsets, PC motherboards, TV set top boxes, modems etc. and make about 55-70% of the manufacturing cost of these items.
  • Notifications:
    • Notification No.93/2007-Customs dated 8th August, 2007 : Exempting ICs from 4% additional duty.
  • FICCI seeks more sops for exporters : Concerned about the recent slowdown in exports, FICCI has sought enhanced relief package for exporters to counter the impact of rupee appreciation. The package proposes inclusion of more products for relief, enhancing duty drawback/DEPB rates from 3% to 5%, reducing interest on export credit to below 5%, increasing value caps, allowing conversion of shipping bills, announcing a package for EOUs against free shipping bills and income tax incentive for exporters.
  • Notifications:
    • Central Excise Notification No.31/2007 (N.T.) dt. 2nd August, 2007 : Notifying conditions, ssafeguards and procedures for supply of items like tags, labels, printed tags, stickers, belts, buttons and hangers (referred as "specified goods") produced or manufactured in EOUs and cleared without payment of duty to a unit in DTA for use in the manufacture or processing of goods which are exported in terms of Para 6.9 (h) of FTP 2004-09.
  • RBI announced first quarter review of its Monetary Policy 2007-08 : Unveiling the first quarter of its Monetary Policy for 2007-08 on 31st July/07, RBI kept key rates unchanged, but hiked bank's cash reserve ratio (CRR) by 50 basis points at 7% and removed the Rs.3,000-crore cap it had on daily reverse repos under its liquidity adjustment facility. Both the operations rates - the repo and reverse repo - kept unchanged at 7.75% and 6% respectively. The measures announced by the RBI Governor were aimed to manage the excess liquidity in the system and keep inflation in check.
  • Notifications:
    • Customs Notification No.90/2007 dt. 26th July, 2007 : Exempting goods covered under Chapters 84, 85 etc. for the manufacture of All semiconductors, LCDs,OLED,PDP, storage devices, solar cells, photovoltatics etc. from the whole of additional duty of customs
    • Notification No.15/(RE-2007)/2004-2009 dt. 20th July, 2007 - Amendments in FTP 2004-09, para 6.2(h), regarding procurement and export of spares/components etc.
    • Public Notice No.23(RE-2007)/2004-09 dt. 20th July, 2007 : Amendments in Appendix 14-1-H of the Handbook of Procedures (Vol.1) regarding DTA sales
    • Central Excise Notification No.31/2007 dt. 19th July, 2007 : Amendment in Notification No.6/2006-Central Excise dt. 1st March, 2006, adding 'Recorded smart cards' and Recorded proximity cards and tags' to the entries after Sl.No.22.
  • New DEPB Scheme by November 2007 : During a recent CII Conference, the Director General of Foreign Trade, Mr. R.S. Gujral said that the new DEPB Scheme was likely to be out by November, 2007.
  • DEPB, Duty Drawback benefits likely for SEZs, EoUs too : Exporters in SEZs and EoUs are also likely to be given the DEPB and duty drawback benefits, given out by the government to other exporters recently, to offset the losses incurred due to the rising rupee.
  • 2G spectrum policy to be formulated in few months along with allocation plan for 3G services : According to the Department of Communications, the 2G spectrum policy will be formulated along with the spectrum pricing and allocation for 3G services. Of the 42.5 Mhz spectrum, 25 Mhz will be set aside for 3G services. The policy is expected in the next few months, around the time the defence forces vacate 42.5 Mhz of spectrum. The move is part of Communications and IT Minister A Raja's attempts to solve the spectrum issue comprehensively.
  • Notifications:
    • Notification No.68/2006-Cus (NT) dated 16.7.2007 and Customs Circular No.25/2007 dated 16th July, 2007…..Regarding All Industry Rates of Duty Drawback, 2007-08
    • Public Notice No.17(RE-2007)/2004-2009 dated 12.7.2007 and Public Notice No.18 dt. 13.7.2007 - New DEPB Rates effective from 1st April, 2007.
    • Customs Circular No.24/2007 dt. 2.7.2007 - Delay in payment of customs duty refunds.
  • Re-hit exporters get Rs.1,400 exporters get Rs.1,400 crore package : On 12th July, 2007, the government doled out a Rs.1,400 crore-a-year relief package, hit by a sharp appreciation of the rupee. The package includes interest rate relief, adjustment of duty drawback rates and reimbursement of export claims. Drawback rates have been increased on most items and some more items have been added to the list effective from 1st April, 2007, which have undergone significant changes in line with changes in the price of inputs and duties. Except the revised drawback rates, all other measures are temporary in nature to bail out exporters.
  • VAT on CFLs set to be cut to 4% : Compact Fluorescent Light (CFL) bulbs may turn cheaper soon as efforts are on to reduce the value added tax (VAT) on these energy-efficient products to 4%, a formal proposal for which may be submitted to the Group of State Finance Ministers on VAT, In several States, 12.5% VAT is charged at present, while Haryana and Punjab have already reduced the rate to 4%.
  • Notifications:
    • Customs Notification No.78/2007 dt. 29th June, 2007 : Regarding anti dumping duty on import of Compact Discs-Recordable (CD-Rs) from the People's Republic of China, Hong Kong, Singapore and Chinese Taipei.
  • Govt plans to slash custom tariffs in step with Asean rates : As a part of government's long term agenda to bring the country's customs tariffs in step with the Asean levels, it plans to not only to cut down the present peak rate of 10%, but will also reduce duty on raw materials and intermediaries below the present rates of 5% and 7.5%. At present, India has an average industrial tariff of 9.4%, which is much higher than the Asean's average rates - 6.3% in Philippines, 6.9% in Indonesia and 8.4% in Malaysia. The cut in duty rates is likely to be accompanied by a reduction in the dispersual of duty rates as well. The move is to make the country more competitive in terms of investment and exports and also to help contain inflation if and when it happens again.
  • Notifications:
    • Public Notice No.10(RE:2007)/2004-2009 dt. 22nd June, 2007 : Amendments in Sl.No.B-20, in respect of export item (Colour TV) and various import items (like resistors, transistors, diodes, capacitors, ferrites, PCBs, picture tubes, ICs etc).
    • Public Notice No.11(RE-2007)2004-09 dt. 22nd June, 2007 : In Appendix 4-C, under the list of agencies authorized to issue Certificate of Origin-non-preferential, under Delhi, Sl.No.2, stands amended to - APEX CHAMBER OF COMMERCE & INDUSTRY OF NCT DELHI, A-8 Naraina Industrial Area, Phase-II, New Delhi 110 028 (Tel - 011 25893646, Telefax - 011-41418461, E-mail - delhiichamber@touchtelindia.net, website - www.dcci.in.
  • Semiconductor Policy norms to be issued early July 2007 : The guidelines relating to the proposed semiconductor policy, which was notified earlier, are likely to be issued early in July 2007 with the Ministry of Communictions and IT forwarding the same to the Finance Ministry for its nod. The Ministry of IT has already set up an appraisal committee headed by the Addl Secretary of DIT. This Committee will receive expressions of interest from investors and submit its recommendations to the government for its approval.
  • Indo-Thai FTA on goods to be reality by Sept/07 : According to the Commerce Ministry, Shri Kamal Nath, talks on Indo-Thai FTA on goods will start in July and finish by September, 2007. The two countries are on track to conclude an FTA in the near future to establish the FTA covering trade in goods by 2010.
  • Drawback, DEPB rates may be hiked to help exporters : The Finance Ministry is considering a suggestion by the Commerce Ministry to enhance duty neutralization rates to make up for the revenue lost by exporters due to sharp appreciation in the rupee. According to Federation of Indian Export Organisation (FIEO), the Commerce Secretary, Mr. G.K. Pillai had informed them about serious discussions initiated with the Finance Ministry and the RBI for enhancing DEPB and Drawback Rates to 4-5%. Another proposal to compensate exporters is that they may be paid interest on their export earners foreign currenty account at par with what the foreign currency non-resident holders get.
  • Framework for GST regime likely by Oct 2007 : The government is likely to come up with a framework for introducing goods and services tax (GST) mechanism by October 2007 when the joint working group of State and Central government officials will submit their report. The panel has decided to call experts, academicians and industry chambers to discuss various models of GST and come up with suitable model.
  • TRAI paper seeks reviewal of licensing : The Telecom Regulatory Authority of India (TRAI) has released a consultation paper seeking the industry's view on reviewing existing licensing conditions and capping the number of service providers per circle. According to this consultation paper. According to the paper, TRAI has hinted on the need to limit the number of operators per circle. At present, TRAI provides licences based on availability of spectrum. The paper also seeks a change in the existing mergers and acquision policy. Currently, no single company can hold more than 10% in another operator in the same service area.
  • Peak Customs duty rate may fall to 6-8%: PwC : PricewaterhouseCoopers expects India's peak Customs duty rate to fall to 6-8% in the near future as the country goes ahead with its plan to bring down tariff to Asian levels.
  • VAT in Puducherry from July 01, 2007 : Puducherry government on 2nd June/07 promulgated an ordinance bringing into force Value Added Tax from July 01, 2007.
  • UP likely to end trade isolation, roll out VAT : Uttar Pradesh, the only state not to have implemented VAT, may soon end its trade isolation under the new Mayawati dispensation. According to the top sources in the CM's office, the State may soon come up with an official announcement for implementing VAT
  • FDI Policy review to be over by July/07 : According to a recent statement by Mr. Ajay Dua, Secretary, Department of Industrial Policy and Promotion (DIPP), the Foreign Direct Investment (FDI) policy review is currently under way and would be completed and announced by July 2007. The results of the FDI review would be in the direction of liberalization. Mr. Dua outlined the growing attraction of India as an investment destination and identified six sectors with potential which includes IT and ITeS Services, Telecommunications, Automobiles/Auto Ancillaries, among others
  • Notifications:
    • Notification No.6(RE-2007)/20042009 dt. 23rd May/07 : Amending FTP 2004-09, to enable shipments from non-EDI enabled ports to be also eligible for benefits under Focus Product Scheme and Focus Market Scheme.
    • Customs Notification No.72/2007 dt. 21st May/07 : Amendments in various Customs Notification Nos.92/2004, 97/2004, 41/2005, 90/2006 and 91/2006.
  • Duty-free imports under Target Plus tightened : Through a recent circular, CBEC has specified the norms for duty free import of products under the Target Plus Scheme (TPS), and has tightened the norms by allowing exporters to import only goods that will be used as an input for manufacturing of the exported goods. Under TPS, exporters are entitled to rewards in the form of duty free credit based on incremental exports.
  • Notifications:
    • Customs Circular No.21/2007 dt. 8th May/07 : Clarification regarding scope and coverage of goods imported under Target Plus Scheme.
  • DOT mulls cap on cell operators : The Department of Telecommunications (DOT) is contemplating applying a cap on the number of mobile operators in each service area (circles) to ensure that adequate spectrum can be made available to all current licencees so that they can expand services and maintain quality of service. The ceiling will differ from circle to circle, depending on the viability of the number of operators in the circle. Currently, India does not limit the number of operators in a circle and upto 8 operators offers services in each of the 23 circles in the country.
  • Notifications:
    • Customs Notification No.47/2007-NT dated 8th May, 2007 : Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.
    • Customs Circular No.18/2007 dt. 24th April/07 : Grant of waiver of the requirement of Bank Guarantee in respect of imported goods to be warehoused in Public or Private Bonded Warehouses.
  • DOT sets up panels to oversee FDI in telecom sector : The Department of Telecommunications has constituted two committees to oversee implementation of foreign direct investment (FDI) in the telecom sector by the companies, especially with regard to the guidelines concerning security aspects. Recently, the government notified the revised guidelines for telecom companies willing to hike FDI from 49% to 74%. One Committee has been set up under the Chairmanship of DoT's Additional Secretary, Mr. R. Bandyopadhyay to monitor compliance of the Cabinet decision by various agencies on a quarterly basis.
  • Notifications:
    • Central Excise Circular No.851/9/2007-CX dt. 3rd May/07 : Procedure governing the movement of indigenous goods from a factory of manufacture or warehouse to a unit set up/STP under EOU/EHTP/BTP scheme.
    • Customs Circular No.19/2007 dt. 3rd May/07 : Warehousing of goods imported and/or procedured indigenously by EOU/EHTP/STP/BTP units.
  • Govt withdraws Notification; GPRS Mobiles to attract 4% customs duty : The Central Board of Excise & Customs (CBEC) has gone back on a move to classify GPRS mobile phones as radio navigational apparatus (better known as satellite phones) for tax purposes. This means GPRS phones will attract a 4% customs duty rather than 34% applicable on satellite phones. The move comes as major relief to mobile phone and PDA manufacturers like Nokia, Samsung, Backberry, Motorola etc.
  • Salient features of RBI's Annual Policy for 2007-08 : After five increases in the past year, the Reserve Bank of India, in its Annual Policy announced on 24th April, 2007, kept the interest rates unchanged and chose to encourage more foreign exchange outflows and stem the threat of inflows in its fight against inflation. With the new measures, RBI has forecast economic growth at around 8.5 per cent for 2007-08. The special features are :
    • Repo, Reverse Repo, Bank Rate, CRR unchanged
    • Risk weight on home loans upto Rs.20 lakhs reduced to 50% from 75%.
    • NRI deposits interest cap lowered 50 bps
    • Firms' overseas investment limit enhanced to 300% of net worth from 200%
    • Listed Indian firms' portfolio investment limit in listed overseas firms raised to 35% of net worth from 25%.
    • Banks allowed to lend to overseas step-down subsidiaries of Indian companies
    • Mutual Funds' overseas investment limit raised to $4 billion from $3 billion
    • Individual overseas investment limit doubled to $100,000
  • Notifications:
    • Notification No.01/2007 dt. 19th April, 2007 : Notifying the Foreign Trade Policy 2004-2009 incorporating the Annual Supplement as updated on 19th April, 2007. The policy shall come into effect w.e.f. 1st April, 2007.
    • Customs Circular No.17/2007 dt. 19th April, 2007 : Clarification in respect of classification of higher technology featured mobile/cellular handset or telephones.
    • Customs Circular No.16/2007 dt. 18th April, 2007 : Regarding Inter Unit Transfer of Capital Goods from one EOU/STP/EHTP unit to another EOU/STP/EHTP unit
    • Notification No.57(RE-2006)/2004-2009 dt. 13th April, 2007 : Amending para (vi) of "Nature of Restriction" against Sl.No.147 of Chappter 44 of ITC of Foreign Trade Policy 2004-2009, to effect the exports within a period of 12 months from the date of import.
  • Annual Supplement for 2007-08 to FTP announced; Commerce Minister eyes $200 billion from exports by 2008-09 : The Commerce & Industry Minister, Mr. Kamal Nath, unveiling the Annual Supplement for 2007-08 to the Foreign Trade Policy 2004-09 on 19th April, 2007, set an export target of $160 Billion for the current fiscal 2007-08, a 28% increase over last year's $124.63 billion, with a projected export target of $200 billion during 2008-09. India's share in world trade is now over 1%. Some of the salient features announced by the Minister:-
    • Service Tax exemption to exporters
    • Export duty benefit schemes extended to SEZs
    • Focus Products, Focus Market Schemes expanded
    • DEPB Scheme extended to 31st March, 2008
    • New export promotion scheme launched for high-tech products
    • Export obligations under EPCG scheme eased
  • Notifications:
    • Notification No.3(1)/2007-IPHW (SIPS) dated 21st March, 2007 issued by DIT : Notifying Special Incentive Package Scheme to encourage investments for setting up Semiconductor Fabrication.
    • CBEC Circular No.15/2007-Customs dated 20-3-2007 : Covering all large tax payer EOUs (Export Oriented Units) under the control of Large Taxpayer Units (LTUs), which have been created to service large taxpayers paying excise duty and corportate tax/income tax/service tax etc. under a single window.
  • 3G Spectrum Policy likely by month-end : With the Defence Ministry agreeing to vacate 40 Mhz spectrum by July/07, the DOT Secretary, Mr. D.S. Mathur has stated that the much-awated 3G Spectrum Policy may be announced by the end of April, 2007.
  • CST cut from 1st April notified : The Central Government on 29th March/07 notified reduction in the Central Sales Tax (CST) from 4% to 3% effective from 1st April, 2007.
  • DEPB scheme likely to be extended : According to newspaper reports, while the Finance Ministry has agreed to extend the DEPB scheme by only one year, the Ministry of Commerce is hopeful that the existing scheme will be allowed to continue for the next three years after which it will be easier to replace as the common goods and services tax (GST) will be in place by 2010.
  • IT Minister for tariff cut on Computers : The Union IT Minister, Mr. Dayanidhi Maran, has taken up the case for reduction of tariffs on computers with the PM and FM to enable higher investment flows to the sector. This follows the meeting the Dell CEO had with the Minister last week on the issue. The IT Ministry is reported to have represented for scrapping duties on computers to give it the same status as cellular phones.
  • VAT rates may go up to absorb 2% CST cut impact : The planned 2% cut in Central Sales Tax (CST) from 2008-09 may be set off by a 1% increase in the value added tax (VAT). Based on a proposal made by the Empowered Committee on VAT, the Finance Ministry is likely to increase VAT to 5% on items that are currently taxed at 4%.
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