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Outline Of Presentation
Indias Foreign Trade Current Economic Crisis Foreign Trade Policy Components and Schemes Foreign Trade Policy New Initiatives
0.92%
1.64%
3
Indias Foreign Trade Exports & Imports (Figures in US$ billion) Year
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 (April-Oct09)*
% Imports Growth
30.8 23.4 22.5 29.0 13.6 111.52 149.17 185.60 235.9 287.76 146.77
% Growth
42.7 33.8 24.4 27.0 14.3
April- Sept.
October November December January 2009 February March April 08 to March 09 Month April 2009 May
73.558
14.675 12.909 14.625 14.889 15.221 17.254 163.13 2008-09@ 18.460 18.687
108.907
14.131 11.163 13..368 12.869 11..941 12..916 185.295 2009-10 11.909 11.368
+ 48.1
-3.7 -13.5 -8.6 -13.6 -21.5 -25.1 +13.6 Increase(+) / Decrease (-) -35.5 -39.2
June
July August September
19.181
19.030 17.759 15.789
13.059
13.623 14.289 13.608
-31.9
-28.4 -19.5 -13.8
DECLINE IN EXPORTS
Impact on Indian exports: Suffered a decline in the last 11 months since October 2008. April - September 2009 exports show a decline of 28.5% (in $ terms) and 18.6% (in Rupee terms) vis--vis last year. Employment intensive sectors have been severely affected. Tea (-37.2%), Spices (-27.8%), Cashew (-27.5%), Oil-meals (- 42.9%) Iron-ore (-29.5%), Leather and Leather Manf. (-26.6%), Gems & Jewellery (-28%), Basic Chemicals (-26.9%), Engineering Goods (-32.1%), Electronic Goods (-32.2%). Cotton Yarn /Fabrics /Made-ups (-31.5%), Jute Mfg. incl. Floor Covering (-39.8%), Carpets (-29.8%), Handicrafts (-29.8%), Petroleum Products (-43.1%), Plastics & Linoleum (-23.2%).
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Large program for construction of affordable housing announced Assistance under the JNNURM for the purchase of buses for their urban transport systems. Accelerated depreciation of 50 percent for commercial vehicles Removal of ban on Government departments for replacement of vehicles
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Enhancing the period of preshipment and post-shipment Rupee Export Credit by 90 days each, Increasing the time period of export realization for nonstatus holder exporters to 12 months etc. 12
% share in Total
12% 11% 5% 5% 4% 4%
1 2 3 4 5 6
USA United Arab Emirates China Singapore Hong Kong United Kingdom
7
8 9 10
Germany
Netherlands Saudi Arabia Belgium
5.9
5.9 4.8 4.3
4%
4% 3% 3%
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Technological Upgradation
Deemed Exports Export Oriented Units (EOUS), Electronics Hardware Technology Parks (EHTPS), Software Technology Parks (STPS) and BioTechnology Parks (BTPS) Special Economic Zones
17
18
- 12.
Restrictions fall under two Categories Dual Use Items (SCOMET items) Special provision for these items under Weapons of Mass Destruction Act, 2005. General Trading Items - Export Facilitation Committee looks into applications for license for these items.
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CENTRAL DUTIES:
CUSTOMS DUTYBasic, Addl customs (CVD including 4% Addl. duty, Education Cess, Antidumping, Safeguard duties etc. EXCISE DUTY--- Basic, Addl Excise duty etc. CENTRAL SALES TAX (CST) SERVICE TAX EXPORT CESS INCOME TAX [Exemption for SEZs ;EOUs (upto 31.3.2011) FBT (Withdrawn)
OTHERS:
ELECTRICITY DUTY, SALES TAX, OCTROI, etc.
GST-- Implications
20
Advance Authorisation Scheme Duty Free Import Authorisation (DFIA) Scheme Schemes for Gems & Jewellery Sector Export Promotion Capital Goods (EPCG) Scheme Duty Entitlement Pass Book (DEPB) Duty Drawback Scheme Terminal Excise Duty (TED) Refund
21
Facility available for Physical exports (including supplies to SEZ units & SEZ Developers), deemed exports and Intermediate supplies. Minimum 15% V.A. Time period for import & export Penalty clauses 2008-09 19,146 authorizations issued for CIF value of Rs. 1,04,333 crores 22
Scheme made operational from 1.5.06. This was introduced to facilitate transfer of the authorisation or the inputs imported, once export is completed Minimum 20% value addition stipulated. Based on SION 22 sensitive items Validity similar to advance authorisation Sectors availing
2008-09 3,815 authorizations issued for CIF value of Rs. 8,779 crores
23
Gems & Jewellery Scheme Duty Free Procurement of precious metal (Gold / Silver / Platinum) from the nominated agencies either in advance or as replenishment. Duty Drawback scheme notified Duty Free Import of Consumables for export production upto a specified percentage of FOB value of previous years export.
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Objective is to offset high freight cost and other externalities to select international markets with a view to diversify the markets and to enhance Indias export competitiveness in these countries.
Currently 109 markets have been notified;
Exports of all products (except some in-eligible items / categories) to notified countries entitled for Duty Credit Scrips equivalent to 3 % of FOB value of exports. Pre realisation & post realisation Validity Utility
2008-09 - Duty credit scrips issued under FMSRs.347 crores
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Exports of notified products to all countries entitled for Duty Credit scrip equivalent to 2 % of FOB value of exports.
Currently over 1000 Products (at 8 digit level) covered under FPS. Validity Utility 2008-09 - Duty credit scrips issued under FPS Rs 215 crores.
29
To accelerate growth in export of Services to create a powerful and unique Served from India Brand;
All service providers (except a few ineligible sectors / services) entitled to duty credit scrips equivalent to 10 % of free foreign exchange earned during the year; Validity Utility Actual User 2008-09 785 SFIS scrips issued for duty credit worth Rs.736 crores.
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32
With an objective to promote investment for upgradation of technology of specified sectors Status Holders shall be entitled to incentive scrip @1% of FOB value of exports in those sectors made during 2009-10 and during 2010-11, in the form of duty credit scrip. Mutually exclusive with EPCG
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Export Oriented Units (EOUS), Electronics Hardware Technology Parks (EHTPS), Software Technology Parks (STPS) and Bio-Technology Parks (BTPS) EOUs are permitted for manufacture of goods including repair, remaking, reconditioning, re-engineering and rendering of services. Trading activity is not permitted. Duty free imports of all inputs. Exemption from Income Tax under Section 10 B (presently extended till 31.3.2011.) Refund of Central Sales Tax (CST) paid on supply of goods from Domestic Tariff Area (DTA) to EOU. 50% of FOB value of exports allowed to be sold in the DTA on payment of concessional duty (50%). EOUs have to be a positive net foreign exchange earner. NFE is to be achieved cumulatively in a block of 5 years.
35
Supply of goods manufactured by Domestic Units to certain authorisation holders / recognised projects which are otherwise entitled for Duty Free Imports. Purpose is: Import Substitution.
Benefits available in the form of: Advance Authorisation / DFIA; Deemed Export Duty Drawback and TED Refund.
36
Agreement on Subsidies and Countervailing Measures Prohibited subsidies: a) Contingent upon export performance b) Contingent upon the use of domestic over imported goods (Import Substitution Subsidy)--.
Exception: Foot note 61 of Annex II to the agreement: Exemption or remission of duty (Indirect tax) on the inputs (which are physically incorporated) or Oil, fuel, energy, catalyst used in the export production permitted.
37
Agreement recognises the important role of subsidies in economic development of developing countries and transformation of centrally planned economies to market conditions. Least developed countries and developing countries having less than US$ 1000 per capita GNP are exempted from discipline of prohibited subsidies.
38
--Prohibition not applicable to ANNEX VII countries which includes India provided Export Competitiveness in a product not reached; (Export Competitiveness Export of the product reached a share of at least 3.25% in world trade of that product for two consecutive calendar years Phase out over a period of 8 years)
--However export subsidies granted by ANNEX VII countries can be subject to countervailing duty 39 action.
One of the first Government Departments to enable online processing of applications. DGFT website updated on daily basis. All DGFT Offices computerised and networked to the DGFT NIC Server. Applications for Export / Import are made online with digital signature and Electronic Fund Transfer Facility.
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A new facility for import on consignment basis of cut & polished diamonds for the purpose of grading/ certification purposes has been introduced [Branch of Gemological Institute of America (GIA) at Mumbai has been notified for the purpose].
In an endeavour to make India a diamond international trading hub, plans are to establish Diamond Bourse (s).
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49
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The procedure for issue of Free Sale Certificate has been simplified and the validity of the Certificate has been increased from 1 year to 2 years.
Automobile industry, having their own R&D establishment, would be allowed free import of reference fuels (petrol and diesel), upto a maximum of 5 KL per annum.
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--Status Certificate issuance Export figures (ANF 3A) -- Duty Neutralisation Schemes: App. 23 for Adv Authorisation & DFIA EPCG Scheme ANF 5A to 5D; Append. 26 & 26A Gems & Jewellery Scheme ANF 4 I -- Reward Schemes: Export certification for all schemes -- Turnover cft for Marble import entitlement etc
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Impact Assessment
GDP growth figures for India for 2008 is 5.4%; and it has been projected at a higher level of 6.5% for the Year 2009, with due credit to Stimulus Measures announced by the Government of India and the RBI. IIP figures for May, 2009 onwards show that certain industrial sectors like steel, commercial vehicles, cement, two wheelers, intermediate goods etc have started looking up.
Rate of decline in export growth is somewhat reducing, which indicates that while the impact of global recession is still continuing on our exports, the stimulus packages have started showing their impact in arresting the steep decline in 56 exports.
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Thank You
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