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Published by Ugr Singh

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Published by: Ugr Singh on Sep 10, 2013
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The long-term vision of the Department of Commerce is to make India a major player in worldtrade by 2020, and assume a role of leadership in the
internaonal trade organizaons commensurate
with India’s growing economic and demographic
prole. In consonance with its vision of ensuring
sustained accelerated growth of exports andmaking India a major player of world trade, theGovernment announces a Foreign Trade Policy
(FTP) every ve years. FTP is annually reviewed
to incorporate changes necessary to take care of 
emerging economic scenarios both domescallyand globally.
The underlined philosophy of supplement toForeign Trade Policy is based on seven broadprinciples:a) Give a focused thrust to employment intensive
industry.b) Encourage domesc manufacturing for inputs
to export industry and reduce the dependenceon imports
c) Promote technological up gradaon of exports to retain a compeve edge in global
d) Persist with a strong market diversicaon
strategy to hedge the risks against globaluncertaintye) Encourage exports from the North EasternRegion given its special place in India’seconomy
f) Provide incenves for manufacturing of greengoods recognising the imperave of buildingcapacies for environmental sustainability
Chapter-4External Sector and India’s Foreign TradePolicy (FTP) 2009-14
g) Endeavour to reduce transacon cost throughprocedural simplicaon and reducon of 
human interface
The FTP 2009-14, was updated on June, 2012.
The salient features of this focussed on reducinginterest burden and extension of the Interest
Subvenon Scheme upto 31
March, 2013, focuson labour intensive sectors such as Toys, SportsGoods, Processed Agricultural Products and Ready-
Made Garments. The Supplement also provided for
extension of the Zero Duty EPCG Scheme (Export
Promoon Capital Goods Scheme
ll 31st March2013 with enlarged scope. Other crical iniaves
include: Support for Export of Green TechnologyProducts, Support for Infrastructure for Agriculture
Sector, Incenves for Promong Investment in
Labour Intensive Sectors, Encouragement for
Manufacturing Sector in Domesc Market
three new towns of export excellence, simplicaon
of procedures, focussing on E enabled transmission
of foreign exchange etc.
In view of the Department’s strategy of export
diversicaon with focus on new markets andcommodies, 7 new markets have been added toFocus Market Scheme (FMS), 7 new markets have
been added to the Special Focus Market Scheme(Special FMS) and 46 new items have been added
to Market Linked Focus Product Scheme (MLFPS).
Addional incenves to boost exports
Government has recently reviewed the situaon
arising out of current economic scenario and
declining growth in the western world. Some
urgent steps are required for policy stability, toboost the exports and to reverse this declining
36Annual Report 2012-13
trend. Accordingly, it has been decided to:
(a) Extend period of Interest subvenon:
Interest Subvenon Scheme on rupee export creditis available to certain specic export sectors. Theseare (i) Handicras, (ii) Carpets, (iii) Handloom, (iv)
Readymade Garments, (v) Processed Agriculture
Products, (vi) Sports Goods and (vii) Toys. Inaddion Small and Medium Enterprises (SME) inall sectors enjoy this benet. Currently the scheme
ends on 31
March, 2013. Now this scheme of 2%interest subvenon to these specic sectors will beextended by one more year, i.e., up to 31
(b) Widen Interest Subvenon Scheme:
Engineering Sector contributes handsomely to
both job creaon and value addion of Indianmanufacture. To retain this compeve edge and
also to give a boost to our engineering exports,
certain specic sub-sectors of engineering sectorwould be extended the benet of 2% interestsubvenon. They will receive this benet for thelast quarter of the current nancial year, that is,
from 1
January 2013 to 31
March 2013. Thegeneral interest subvenon scheme is beingconnued ll 31
March, 2014. Accordingly thesespecic engineering sub-sectors would connueto enjoy this benet of interest subvenon ll 31
March, 2014.
(c) Introduce a “pilot scheme” of 2 % InterestSubvenon for Project Exports through EXIMBank:
A “pilot scheme” of 2% interest subvenon
is being introduced for Project Exports, throughEXIM BANK for countries of SAARC region,
Africa and Myanmar. This scheme is being madeoperaonal for year 2012-13 onwards, for acombined worth of 500 million USD to begin with.The interest subvenon would be linked to the
Buyers’ Credit Scheme which was introduced in the
last nancial year and which is being implementedthrough EXIM BANK, ECGC and the NaonalExport Insurance Account (NEIA). The essence of 
the scheme is to boost India’s Project exports inthe SAARC/African region and to our neighbourMyanmar, by providing long term concessional
credit through the EXIM BANK, as co-nancing forthe project exports in infrastructure sectors. Aerthe experience of this inial pilot, the upper capmay be raised. The eligible cases for such incenvewould be sponsored by EXIM BANK.
(d) Incenve on Incremental Exports:
It has
been decided to grant incenve on incremental
exports made during the period January-March
2013 over the base period January-March 2012.The incenve would be granted to an IEC holder
at the rate of 2% on the incremental growth of exports made to USA, EU and Asian Countries
during this parcular quarter i.e., January-March2013. Certain exports like deemed exports, service
exports, third party exports, export-turnover of SEZ
units etc. would not be eligible under the scheme.
Thus there will be focus on increasing export to
certain specic desnaons.
Addions in the Chapter 3 Schemes:
Certainproducts under the Focus Product Scheme andmarkets under Focus Market Scheme have been
added. Similarly some addions have been madeto MLFPS/VKGUY. These addions under Focus
Market Scheme (FMS)/Focus Product Scheme (FPS)/Market Linked Focus Product Scheme (MLFPS)/Vishesh Krishi & Gram Udyog Yojna (VKGUY) would
be eligible for incenves on exports from 1.1.2013which has been noed through Public Noce 42dated 31.12.2012.
Scheme-wise details
Duty neutralizaon / remission schemes are based
on the principle and the commitment of theGovernment that “Goods and Services are to be
exported and not the Taxes and Levies”. Purpose is
to allow duty free import / procurement of inputsor to allow replenishment either for the inputs
used or the duty component on inputs used. There
are two categories of these schemes namely,
pre-export schemes and the post-export schemes.
Brief of these schemes alongwith the amendments
External Sector and India’s Foreign Trade Policy (FTP) 2009-14
carried out during the current year are given below.
Pre - Export Schemes
Advance Authorizaon Scheme
Scheme allows duty free import of inputs,
along with fuel, oil, catalyst etc., required formanufacturing the export product. Inputs areallowed either as per Standard Input Output Norms(SION) or on adhoc Norms basis under actual usercondion. Norms are xed by Technical Commieei.e., Norms Commiee. This facility is available
for physical exports (also including supplies toSEZ units & SEZ Developers) and deemed exports
including intermediate supplies. Minimum valueaddion prescribed is 15%, except for certainitems. Exporter has to full the export obligaonover a specied me period, both in quantyand value - wise. This year the facilies to clubauthorizaons have been simplied and powershave been decentralized to RAs. Export obligaonperiod in respect of Advance Authorisaons havebeen reduced to 18 months from 36 months. Thevalidity of Advance Authorisaons / Duty FreeImport Authorisaon
DFIAs) has been reducedfrom 24 months to minimum 12 months or up to
31.3.14 from issue date, whichever is more.
Duty Free Import Authorizaon (DFIA)
DFIA Scheme has been made operaonal from01.05.2006. One of the objecves of the schemeis to facilitate transfer of the authorisaon orthe inputs imported as per SION, once export iscompleted. Provisions of DFIA Scheme are similar toAdvance Authorisaon scheme. A minimum valueaddion of 20% is required under the scheme.
Schemes for Gems & Jewellery Sector
Gems & Jewellery exports constute a majorporon of our total merchandise exports. It is anemployment oriented sector. Exports from thissector suered signicantly on account of theglobal economic slowdown.
Duty free import / procurement of precious metal
(Gold / Silver / Planum) from the nominated
agencies is allowed either in advance or as
replenishment. In addion, exporters of Gems &
Jewellery items are allowed access to duty Free
Import of consumables for export produconupto a certain specied percentage of FOB valueof previous years’ export. List of items allowed for
duty free import by Gems & Jewellery sector has
been expanded by inclusion of addional items
such as tags and labels, security censor on card,
staple wire and poly bag. This will reduce the costof the product to some extent.
Monitoring of import of Gold by NominatedAgencies as per the new guidelines has begun and
this would result in beer compliance.
Post- Export Schemes
Duty Drawback Scheme
Duty Drawback scheme allows refund of customsduty and the excise duty on the inputs used in the
manufacture of the export product at a speciedpercentage of FOB value of exports. Service Tax on
the input services has also been factored in the All
Industry rate of Duty Drawback. Duty drawback
scheme for physical exports is being administeredby the Department of Revenue and that of deemed
exports, by the DGFT.
Duty drawback rates for a number of products have
been reduced on account of reducon in tari androll back of adhoc increase eected earlier.
The products which were in the DEPB schemeare given appropriate rates of duty drawback so
that taxes suered by the inputs which go in themanufacture of the export product are rebated.
The Duty Drawback Scheme was announced on
20.09.2011 in place of DEPB scheme.
Other Policy Iniaves
Interest subvenon of 2 per cent has beenextended upto March 2014. It has also been
extended to labour intensive sectors, namely, Toys,

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