EXIM POLICY OF INDIA 2004-09

Introduction: The foreign trade of India is guided by the Export-Import policy of the Government of India.  Regulated by The Foreign Trade Development and Regulation Act 1992.  Exim policy contains various policy decisions with respect to import and exports from the country.  Exim Policy is prepared and announced by the central government.  Exim Policy of India aims to developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payment position.

About the Policy: Mr. Kamal Nath, minister for commerce and industry announced this policy on 31st Aug 2004.  The duration of the policy is from 1st Sept. 2004 to 31st March 2009.  It takes an integrated view of the overall development of India’s foreign trade.  Aim of the policy is to double the global merchandise trade within the policy time period of 5 years

General Objectives of Exim Policy: To establish the framework for globalization.  To promote the productivity competitiveness of Indian Industry.  To encourage the attainment of high and internationally accepted standards of quality.  To augment export by facilitating access to raw material, intermediate, components, consumables and capital goods from the international market.  To promote internationally competitive import substitution and self-reliance.  To double our percentage of share of global merchandise trade within the five year.  To act as an effective instrument of economic growth by giving a thrust to employment generation.

Highlights of the New Foreign Trade Policy 2004-2009
1. Special Focus Initiatives: Semi-urban and Rural Area. 2. Agriculture: Vishesh Krishi Upaj Yojana and Agri Export Zones. 3. Handlooms and Handicrafts: Mark under Market Access Initiatives Scheme and Proposed to start new SEZ. 4. Gems and Jewellery: Import of gold of 18 carat and above has been permitted under the replenishment scheme 5. Leather and Footwear: Duty free import entitlement of specified items shall be 5% of FOB value of exports during the preceding year. 6. Export Promotion Schemes a. Assistance to States for Infrastructure Development of Exports [ASIDE] b. Market Access Initiative [MAI] c. Marketing Development Assistance [MDA] d. Towns of Export Excellence e. Target Plus Scheme. f. Served from India Scheme g. Service Export Promotion Council 7. New Status Holder Categorization Category One Star Export House Two Star Export House Three Star Export House Four Star Export House Five Star Export House Total Performance (In Rs.) 15 crore 100 crore 500 crore 1500crore 5000 Crore

8. Board of Trade: The role is to advising government on relevant issues connected with Foreign Trade Policy.

Implications of the Foreign Trade 2004-09
 Implications on Indian Economy: – This policy propose to simplify procedures and develop technology and infrastructure. Implications on Agriculture: – Special Agricultural Produce Scheme has been introduced for promoting the export of fruits, vegetables, flowers, and their value added products. Implications on Handlooms and Handicraft: – Establishment of Handicraft SEZ and Handicraft Export Promotion Council would promote development of Handloom and Handicraft Industry. Implications on Gem and Jewellery Sector : – This is special thrust area in this policy. – Duty free imports of other inputs would give a further boost to this sector Implications on Leather and Footwear Industry : – Duty free import as a specified percentage of exports. – Exemption on customs duty on equipment for effluent treatment plants would help promoting export form this sector. Implications on Service Industry : – An exclusive service promotion council has been set up in order to map the opportunities for key services in key market. – Develop strategic market access programmes like brand building in co-ordination with sectoral players and recognize nodal bodies of the service industry.

Annual Supplement to Foreign Trade Policy 2004-09
Minister for Commerce and Industry, Government of India keeps on announcing the annual supplements to increase the efficiency of the exim policy. Eg.- He has announced Annual Supplement for this year, as well, to the Foreign Trade Policy 2004-09.

Highlights of the Supplement (2008-09)
DUTY ENTITLEMENT PASSBOOK SCHEME (DEPB) To impart continuity and stability to our foreign trade regime, DEPB scheme is being extended till May 2009. REFUND OF SERVICE TAX The Government has already announced refund of service tax on almost all the services, which are directly relatable to export production and supply. Some services related to export, which do not attract service tax have also been clarified through a Circular. A few remaining issues regarding refund of service tax will also be resolved shortly. INCOME TAX ON EOUs Income tax benefit to 100% EOUs under Section 10B of I.T. Act, being extended by Govt. for one more year, beyond 31.3.2009. SECTORAL INITIATIVES a. IT hardware sector as Special focus initiative - Specific items to be included for benefits under High Tech Product Scheme. There will also be earmarked funds for this sector under the MDA and MAI Schemes. b. Setting up a new Export Promotion Council for Telecom Sector to provide institutional support to exports from telecom sector. c. Export of Toys & Sports Goods will be given an additional duty credit scrip @ 5 % (in addition to the existing benefits under

Focus Product scheme). Separate funds for market promotion activities will also be given for promoting these exports under ongoing MDA Scheme and MAI Scheme. d. Additional duty credit scrip of 2.5% over and above the normal benefit available under VKGUY, for export of certain flowers, vegetables and fruits. RELIEF TO SECTORS AFFECTED BY RUPEE APPRECIATION a. Interest subvention provided last year to sectors affected by rupee appreciation and to SMEs, has been extended by one more year. b. Reduced average export obligation under EPCG, for sectors, which have witnessed decline in exports in the previous year. PROMOTION OF HIGH VALUE ADDED MANUFACTURED PRODUCTS An enhanced duty credit scrip of 2.5% (instead of the normal 1.25% under FPS) would be allowed for export of High value added manufactured products. The list of products will be notified separately. EXPORT PROMOTION CAPITAL GOODS SCHEME (EPCG) a. The customs duty payable under EPCG Scheme has been reduced from 5% to 3%. b. To improve export competitiveness of Indian exports, all exports made towards fulfillment of export obligation under EPCG scheme will now be eligible for incentives/rewards under promotional schemes. c. Average export obligation under EPCG for Premier Trading Houses shall, as an option, be calculated, based on the average of last 5 year’s export, instead of the present 3 years. FOCUS MARKET & PRODUCT SCHEMES a. Coverage of FMS has been increased and additional 10 countries have been included. These are Mongolia, Bosnia-Herzegovina, Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana and Colombia. MEASURES TO REDUCE TRANSACTION COST TO EXPORTERS a. Payment of duty under EPCG scheme through debit of duty credit scrips under the promotional schemes or DEPB w.e.f. 1.1.2009. b. Reduction of fee in case of supplementary claims from 10% to 2%.

BENEFITS TO THE IMPORTERS AND EXPORTERS
Duty Exemption / Remission Schemes of Exim Policy 2004-2009 1. The Duty Exemption Scheme enables import of inputs required for export production. It includes the following exemptions:Duty Drawback: The Duty Drawback Scheme is administered by the Directorate of Drawback, Ministry of Finance. Under Duty Drawback scheme, an exporter is entitled to claim Indian Customs Duty paid on the imported goods and Central Excise Duty paid on indigenous raw materials or components. Excise Duty Refund: Excise Duty is a tax imposed by the Central Government on goods manufactured in India. Excise duty is collected at source, i.e., before removal of goods from the factory premises. Export goods are totally exempted from central excise duty. Octroi Exemption: Octroi is a duty paid on manufactured goods, when they enter the municipal limits of a city or a town. However, export goods are exempted from Octroi. 2. The Duty Remission Scheme enables post export replenishment/ remission of duty on inputs used in the export product. DEPB: Duty Entitlement Pass Book in short DEPB Rate is basically an export incentive scheme. The objective of DEPB Scheme is to neutralize the incidence of basic custom duty on the import content of the exported

products. DFRC: Under the Duty Free Replenishment Certificate (DFRC) schemes, import incentives are given to the exporter for the import of inputs used in the manufacture of goods without payment of basic customs duty. Duty Free Replenishment Certificate (DFRC) shall be available for exports only up to 30.04.2006 and from 01.05.2006 this scheme is being replaced by the Duty Free Import Authorisation (DFIA): It is issued to allow duty free import of inputs which are used in the manufacture of the export product (making normal allowance for wastage), and fuel, energy, catalyst etc. which are consumed or utilised in the course of their use to obtain the export product. Duty Free Import Authorisation is issued on the basis of inputs and export items given under Standard Input and Output Norms (SION).

INTERNATIONAL MARKETING PROJECT

TOPIC:WHAT ARE THE HIGHLIGHTS OF THE EXIM POLICY 2004-

09? EXPLAIN THE BENEFITS TO IMPORTERS AND EXPORTERS.

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