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PRESENTATION ON

OVERVIEW- New Foreign Trade Policy/EXIM POLICY 2009-14

EXIM POLICY
EXIM POLICY OR FOREIGN TRADE POLICY is a set of guidelines and instructions and various policy decision taken by the government in the sphere of foreign trade i.e. with respect to import and export of the country. It is prepared and announced by the central government(Ministry OF Commerce) AND The Union Commerce Ministry, Government of India announces the integrated Foreign Trade Policy (FTP) in every five year. This is also called EXIM policy. The Foreign Trade Policy which was announced on August 28, 2009 is an integrated policy for the period 2009-14 This policy is updated every year with some modifications and new schemes. New schemes come into effect on the first day of financial year i.e. April 1, every year. Formulated under the Import & Export(control) Act, 1947 Now its known as Foreign Trade(Development & Regulation) Act, 1992 Headed by Director General of Foreign Trade

VOLUMES OF EXIM
EXIM policy is established in 5 volumes: 1) Export-import policy: provisions & schemes related to exports & imports. 2) Handbook of procedures(vol 1): export-import procedures to be followed by parties like exporter, importer, licenser etc. 3) Handbook of procedures(vol 2): input-output norms used for working out the proportion of various inputs used/required in the manufacturing of the resultant products so as to determine the advance license entitlement & DEPB (Duty Exemption Pass Scheme) rates

4) ITC (HS) Classification of Export & Import Items: it serves as a

comprehensive references manual for finding out exportability or importability of products with references to the current exim policy. 5) Schedule of DEPB Rates (Vol 5): it provides a complete rate structure of DEPB(Duty Exemption Passbook Scheme).

OBJECTIVE OF F.T.P. 2009-14


To arrest and reverse declining trend of exports. This will be reviewed after every 2 years. To double India's export of goods and services by 2014. To double India's share in global merchandise trade. To encourage exports through a mix of measures including fiscal incentives.

CONT
Simplification of the application procedure for availing various benefits To encourage exports through a "mix of measures including fiscal incentives, institutional changes, procedural rationalization and efforts for enhancing market access across the world and diversification of export markets.

Comprehensive economic partnership agreement


with south Korea. Trade in goods & services agreement with ASEAN .

ANNOUNCEMENTS FOR FPS, FMS, MLFPS


26 New markets added under this scheme

Incentives under FMS raised from 2.5% to 3%


Incentives available under FPS raised from 1.25% to 2% MLFPS expanded by inclusion of products like pharmaceuticals, textile fabrics, rubber products, glass products, auto components, etc

PHASES OF EXIM POLICIES

EXIM POLICY 1992-97


Concessions were announced to boost agricultural exports. Centrally sponsored schemes to set up industrial parks.

EXIM POLICY 1997-2002


To accelerate the countrys transition to a globally-oriented vibrant economy. To stimulate sustained economic growth. To enhance the technological strength and efficiency of Indian agriculture, industry and services. To provide consumers with good quality products at reasonable prices.

EXIM POLICY, APRIL 1998 Zero-duty Export Promotion Capital Goods (EPCG) scheme was extended to all software exporters Delegation of powers to regional licensing offices. Simplified procedures for clubbing of advance license schemes. EXIM POLICY, 1999-2000 The new export-import policy freed import of 894 items from licensing requirements. Physical controls on imports were removed 414 items were removed from the restricted list

EXIM POLICY, 2000-01 Special Economic Zones (SEZs) Sector-specific Packages Import Liberalisation

EXIM POLICY, 2001-02 Removal of Quantitative Restrictions Agricultural Export Zones

EXIM POLICY, 2002-07


Was intented to promote exports which are conducive to the economic development of the country. Special Economic Zones(SEZs) Employment Generation Technology upgradation Growth Oriented EXIM POLICY 2003-2004 To promote export related infrastructure To boost R &D activity To offset the high power costs faced by the manufacturing industry

FOREIGN TRADE POLICY, 2004-09


Exports and Employment Merchandise Exports Product Focus Market Focus Expanding Vishesh Krishi Upaj Yojana India as a Gem & Jewellery hub India as an Automotive Hub India as a refueling stop Trade facilitation measures

THE DAILY NEWS


www.dailynews.com

NEWS WITH A DIFFERENCE

- Since 1879

FOREIGN TRADE POLICY 09-14


The UPA Government has
the IMF estimates project a assu office at a challenging decline of over 11%. time when the entire world is The recessionary trend has huge social implications. The facing an unprecedented World Bank estimate economic slow-down. The year 2009 is witnessing one suggests that 53 million more people would fall into of the most severe global the poverty net this year recessions in the post-war period. Countries across the and over a billion people world have been affected in would go chronically hungry. Though India has not been varying degrees and all major economic indicators of affected to the same extent industrial production, trade, as other economies of the world, yet our exports capital flows, have suffered a decline in unemployment, per capita investment and consumption the last 10 months due to a contraction in have taken a hit. The demand in the traditional WTO estimates project a markets of our exports. grim forecast that global The protectionist measures trade is likely to decline by 9% in volume terms and being..... Ctd on page 2

THE SCORECARD
AREAS UNDER CONSIDERATION GLOBAL EXPORTS TARGET ACHEIVEMENTS

$ 200 BILLION

$168

GLOBAL MERCHANDISING GLOBAL SERVICES EXPORT (ONLY SERVICES) GOODS AND SERVICES

DOUBLE OUR SHARE FROM THE 2003-04 INCREASE SUBSTATIALLY INCREASE SUBSTANITALLY

0.83% TO 1.45%

1.4% TO 2.8%

0.92% TO 1.64

Import restrictions
Freely importable items are open general license category or free list of imports - anybody is allowed to bring in items listed under this category Exim policy prohibits import of certain products Prohibited list contains sensitive items: explosives banned for security reasons. Items banned for environment and pollution-related aspects Wildlife and related products can only be imported for specific purpose with prior permission E.G. Urea can be imported only by MMTC and STC, the government's trading arms Gold, in bulk, by specified banks like SBI , some foreign banks , designated agencies Earlier sugar, edible oil, wheat and rice used to be imported by the government only. liberalization led to freely importable items

SOME SCHEMES
Focus Market Scheme
There were 26 new markets added. E.g.- Egypt, Kenya, Australia, Brazil, New Zealand etc. Duty credit increased to 3% from 2.5% of the FOB value.

Focus Product Scheme


Products now include auto and engineering components. Duty credit increased 2% from 1.25% of FOB and to 5 percent for special focus products (E.g.-handicrafts ).

Market Linked Focus Product Scheme Now includes pharmaceuticals, synthetic textiles, certain iron and steel products, aluminium, and markets extended to Africa, Latin America, Vietnam, Cambodia, Australia and New Zealand. Duty credit raised to 2% from 1.2% on FOB value of exported goods. DUTY DRAWBACK: sec 74 & 75 of Customs Act; Defined as the rebate of duty chargeable on any imported or excisable material used in the manufacture of goods exported from India. EXPORT PROMOTION CAPITAL GOODS(EPCG) Introduced in 1990 Enable the import of capital goods at concessional rate of duty subject to an appropriate export obligation accepted by the exporter.

DUTY EXEMPTION SCHEMES Enable duty- free import of inputs required for export production. Consumables like fuel, oil, energy, catalysts, etc. too are included DUTY REMISSION SCHEMES DEPB-introduced in 1997; grant of credit on post export basis as specified percentage of freight on board value of export made in freely convertible currency Duty free replenishment certificate(DFRC)-introduced on 1 April 2000; to provide the benefits of advance license on post-export basis.

ASSISTANCE TO STATES FOR INFRASTRUCTURE DEVELOPMENT FOR EXPORTS & OTHER ALLIED ACTIVITIES(ASIDE) The schemes provide an outlay for the development of export infrastructure, which is distributed among the states according to pre-defined criteria. i.e the schemes proposes to provide funds to state govts/union territories for export promotion 20% of funds remain with central govt. & 80% of the funds will be given to state govt.s/ union territories.

Scheme for Status Holders (Status Holders means star status holders) 1. Additional Duty Credit Scrip's shall be given to Status Holders @ 1% of the FOB value of past exports accelerate exports and encourage technological up gradation. 2. This facility shall be available for sectors of leather (excluding finished leather), textiles and jute, handicrafts, engineering (excluding Iron & steel & non-ferrous metals in primary and intermediate form, automobiles & two wheelers, nuclear reactors & parts, and ships, boats and floating structures), plastics and basic chemicals (excluding pharma products).

TECHNOLOGY UPGRADATION RE-FIXATION OF ANNUAL (EPCG Scheme) AVERAGE EXPORT OBLIGATION: Taking into account the decline in exports, the facility of Re-fixation of 1. Obligation under EPCG scheme Annual Average Export Obligation for a relaxed. particular financial year in which there is 2. To aid technological up gradation of decline in exports from the country, has export sector, EPCG Scheme at Zero been extended. Duty has been introduced. 3. Export obligation on import of spares, GREENPRODUCTS&TECHNOLOGI ES moulds etc. under EPCG Scheme has Support for Green products and products been reduced by 50%. from North East extended.

ANNOUNCEMENTS
Market Linked Focus Product Scheme (MLFPS) expanded by inclusion of products like pharmaceuticals, textile fabrics, rubber products, glass products ,auto components, motor cars, bicycle and its parts.etc. However , benefits to these products will be provided, if exports are made to 13 identified markets (Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia and New Zealand).

Announcements for MDA & MAI:


Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) has been announced.

Towns of Export Excellence (TEE)


The following cities have been recognized as towns of export excellence (TEE) Handicrafts : Jaipur, Srinagar and Anantnag Leather Products : Kanpur,Dewas and Ambur Horticultural Products: Malihabad

Trade bans TRADE


COUNTRY

BANS
ITEM

IRAQ
IRAN

ARMS AND RELATED MATERIAL


MATERIALS, TECHNOLOGY, EQUIPMENT HELPING IN THEIR NUCLEAR ENRICHMENT PROGRAM. ROUGH DIAMOND ANY MATERIALS, TECHNOLOGY, EQUIPMENT CONTRIBUTING TO THEIR MISSILE PROGRAM ROUGH DIAMOND

VENEZUELA DEMOCRATIC PEOPLES REPUBLIC OF KOREA

COTE DIVOIRE

Thrust Sectors foreign trade policy (09-14)

Gems and Jewellery-getting lustrous


Duty Drawback is allowed on Gold Jewellery exports to neutralize duty incidence. Increase in the limit of personal carriages overseas exhibitions($5 mill.) Plan to establish "Diamond Bourse (s) with an aim to make India and International Trading Hub announced. Introduction of a new facility to allow import on consignment basis of cut & polished diamonds for the purpose of grading/ certification.

AGRICULTURE
Vishesh Krishi and Gram Udyog Yojana Agri Export Zones(AEZ) capital goods imported under EPCG &funds shall be earmarked under ASIDE units in AEZ shall be exempt from bankguarantee under EPCG Introduction of a single window system to facilitate export of perishable agricultural product with an aim to reduce transaction and handling cost. This system will involve creation of multi-functional nodal agencies. These agencies will be accredited by APEDA. Towns of export excellence-threshold limit 250 Cr.

Leather and footwear


Enhancement of duty credit scrip under Focus Product Scheme (FPS) Zero Duty under Export Promotion Capital Goods Scheme (EPCG) Re-export of unsuitable imported materials Increase in the limit for duty free entitlements of import trimmings, embellishments and footwear components i. e On the

payment of 50 % applicable export duty, Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi finished leather from public bonded ware houses.

Other Sectors
Marine-adjustment assistance scheme to be continued till march 2010, Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate of Entitlement (DFCE) Scheme for Status Holders Pharmaceuticals-Export obligation period (EOP) has been extended from 6 months to 36 months, pharmaceuticals a part of MLFPS Tea-bought under VKGUY, minimum value addition under advance authorization scheme for export of tea has been reduced from the existing 100% to 50%.

Announcements for Handloom Exports

The claims under Focus Product Scheme, the requirement of " Handloom mark" was required earlier. This has been removed.

Scheme for Export Oriented Units:

EOUs have been allowed to sell products manufactured by them in DTA (Domestic Tariff Area) upto a limit of 90% instead of existing 75%, without changing the criteria of similar goods, within the overall entitlement of 50% for DTA sale. (This means that instead of 75% these units can sell up to 90 % of their products in the domestic markets)
EOU allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards. Extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs kept under consideration.

OLD WINE, NOT-SO-NEWBOTTLE


No major steps have been taken to address the slowdown in exports and provide a fillip to exports FTP should have addressed: Timely export credit at internationally competitive rates Providing inputs at international prices Safeguard to exporters against dollar fluctuations Review of DEPB scheme in compliance with WTO

Sigh of relief for EXPORTERS


Inter-ministerial group to address issues raised by exporters New directorate of trade remedy measures to be set up Obligation under EPCG relaxed Steps to help exporters reduce transaction costs Single-window scheme for farm exports Export units allowed to sell 90% of goods in domestic market Provision for state-run banks to provide dollar credits Number of duty-free samples for exporters raised to 50 pieces from 15

CONTINUING THRUST -EXPORT TARGET


200

195
190 185 180 175 170 165 160 155 150

ESTIMATED PREVIOUSLY (BN $)

REALISTIC TARGET(BN $)

2004-09

REALISTIC TARGET(BN $)

2009-10 2010-11

2004-09

2009-10

2010-11

Future :
1. The short term objective policy is to arrest & reverse the declining trend of exports & to provide additional support especially to those sectors which have been hit badly by recession in the developing world. 2. Ministry set a policy objective of achieving an annual export growth of 15% with an annual export target of US$ 200 billion by march 2011. 3. In the remaining 3 years of this foreign trade policy upto 2014, the country should be able to come back on the high exports growth path of around 25% p.a.
4. By 2014, they expect to double Indias exports of goods & services. 5. The long term policy objective for the government is to double Indias share in global trade by 2020.

6. In order to meet these objectives, the government would follow a mix of policy measures including fiscal incentives, institutional changes, and procedural rationalizations and enhanced market access across the world & diversification of exports markets. 7. Improvements in infrastructure related to exports. 8. Bringing down transaction costs. 9. Endeavour will be made to see that the goods & services tax rebates all indirect taxes & levies on exports.