The Hindu Business Line : Exporters can now source inputs from SEZs without advance release orders

EXPORTERS with advance licences can now directly procure inputs (import) from special economic zones on the strength of their licences without having to furnish any Advance Release Orders (AROs). The Government has made an amendment to the Foreign Trade Policy 2004-09 to this effect.

Hitherto, advance licence holders were required to convert their licence into an ARO if they opted for sourcing their inputs from the SEZs.

The Government has also now permitted duty-free replenishment certificates and diamond imprest licence holders to procure inputs from SEZs without converting the licences into AROs.

An ARO is an instrument that enables domestic procurement of inputs without payment of duty. The AROs issued by the Directorate-General of Foreign Trade enable licence holders to source products from domestic suppliers at near international prices. The suppliers against AROs could avail themselves of deemed export benefits, including refund of terminal excise duty.

As many as 36 SEZs have already been approved and all the eight export-processing zones have been converted into SEZs. In addition, three new SEZs at Indore, Jaipur and Kolkata recently started operations.

Meanwhile, the Government has empowered the Board of Approvals in the Commerce Ministry to fix the sector-wise investment criteria for establishment of export-oriented units. Currently, only projects with a minimum investment of Rs 1 crore in plant and machinery are considered for being set up as EOUs. This condition, however, does not apply to existing units and units in electronic hardware technology parks and software technology parks. It is also not applicable for handicrafts, agriculture, floriculture, aquaculture/animal husbandry/information technology, services, brass hardware, handmade jewellery and such other sectors as decided by the Board of Approval.

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