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Export Sector

Export means trade across the political boundaries of different nation. Countries all over the world have become interdependent, which necessitated foreign trade. Export promotion continues to be a major thrust area for the government To promote export thereby increasing the Foreign Exchange Reserve govt. has adopted policies are termed as Exim Policy

Contains policies in the sphere of Foreign trade i.e. with respect to import & export from the country. All-out efforts are made to promote exports. Two aspects of Exim Policy The import policy which is concerned with regulation and management Export policy which is concerned with exports not only promotion but also regulation.

To accelerate the economy from low level of economic activities to high level of economic activities by making it a globally oriented vibrant economy and to derive maximum benefits from expanding global market opportunities. To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components,' consumables and capital goods required for augmenting production. To enhance the techno local strength and efficiency of Indian agriculture, industry and services, thereby, improving their competitiveness. To generate new employment. Opportunities and encourage the attainment of internationally accepted standards of quality. To provide quality consumer products at reasonable prices.

Nomenclature of the modified Exim Policy (2002-2007) was changed to Foreign Trade Policy (FTP) for five years up to the year 2009 by the UPA Government in order to enable the country to emerge as a manufacturing and services export hub. To prepare an export-friendly set of policy measures focusing on thrust areas such as textile, leather, gems and jewellery, handicraft, handloom, and agriculture. To help them in overcoming the high transaction cost and erosion of export profit margins and lack of fiscal sops in the form of tax exemptions on export turnover.

Policy that lays down the ground rules and also modifies them for carrying out the countrys exports and imports. Prescribing general provisions relating to imports and exports. Provides special focus initiatives Duty exemption Remission schemes Promotional measures to help exporters compete in the global marketplace.

The FTP and the Exim policy are basically two names for the same policy. Commerce and industry minister Kamal Nath decided it would be more appropriate to call the policy the foreign trade policy in 2004. According to him, it was necessary for the policy to go beyond exports and imports and have an integrated approach to the developmental requirements of Indias foreign trade. The commerce ministry will make annual revisions to the policy, as was done with the Exim policies of the previous years. Revised annually because international trade is dynamic, market conditions change frequently, requiring quick responses.

Duty Exemption Duty Drawback Scheme DFRC (Duty free replenishment certificate) DEPB( Duty entitlement pass book) Deemed Exports Export Production Units

Export Oriented Unit (EOU) Special Economic Zones (SEZ) Software Technology Parks (STP) Electronic Hardware Technology Parks (EHTP)

Importer Exporter Code Number IEC Code is unique 10 digit code issued by DGFT Director General of Foreign Trade , Ministry of Commerce, Government of India to Indian Companies. ITC HS Code List or India Harmonized Code System Code. ITC-HS Codes or better known as Indian Trade Clarification based on Harmonized System of Coding was adopted in India for importexport operations. Indian custom uses an eight digit ITC-HS Codes to suit the national trade requirements. ITC-HS Codes Schedules ITC(HS) Import Schedule I describe the rules and guidelines related to import policies Schedule II describe the rules and regulation related to export policies.

Achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March 2011.
In the remaining three years of this Foreign Trade Policy i.e. up to 2014, the country should be able to come back on the high export growth path of around 25% per annum. By 2014, we expect to double Indias exports of goods and services.

The long term policy objective for the Government is to double Indias share in global trade by 2020.

Improvement in infrastructure related to exports; bringing down transaction costs, and providing full refund of all indirect taxes and levies, would be the three pillars

Import of Capital Goods: Free import of capital good against the payment of applicable import tariffs.

Zero duty EPCG Scheme

Allows import of capital goods for pre production, production and post production at zero Customs duty, subject to an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date.
The scheme will be available for exporters of engineering & electronic products, basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals &allied products and leather & leather products; subject to exclusions as provided in HBPv1.

Concessional 3% Duty EPCG Scheme


Allows import of capital goods for pre production, production and post production at 3 % Customs duty, subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 8 years reckoned from Authorization issue date. In case of agro units, and units in cottage or tiny sector, export obligation equivalent to 6 times of duty saved on capital goods imported, in 12 years from Authorization issue-date. For SSI units, export obligation equivalent to 6 times of duty saved on capital goods, in 8 years from Authorization issuedate, provided the landed CIF value of such imported capital goods under the scheme does not exceed Rs. 5 0 lakhs and total investment in plant and machinery after such imports does not exceed SSI limit

Duty exemption schemes enable duty free import of input required for export production. Duty Exemption Schemes consist of: (a) Advance Authorization scheme (b) Duty Free Import Authorization (DFIA) scheme. A Duty Remission Scheme enables post export replenishment / remission of duty on inputs used in export product. It consist of: (a) Duty Entitlement Passbook Scheme(DEPB) (b) Duty Drawback Scheme (DBK). Duty free import-without the payment of basic customs duty, additional customs duty, education cess, antidumping duty and safeguard duty.

An Advance Authorization is issued to allow duty free import of inputs, which are physically incorporated in export product.
In addition, fuel, oil, energy, catalysts which are consumed/ utilized to obtain export product, may also be allowed. Duty free import of mandatory spares up to 10% of CIF value of Authorization which are required to be exported/ supplied with resultant product are allowed under Advance Authorization. Advance Authorizations are issued for inputs and export items given under SION.

Actual user condition : materials will not be transferable even after completion of export obligation. However, Authorization holder will have option to dispose off product manufactured out of duty free inputs once export obligation is completed. Advance Authorizations necessitate exports with a minimum value addition of 15 %, except for items in Gems & Jewellery sector, for which value addition would be as per paragraph 4 A.2.1 of HBP v.1. In case of Authorization for import of Tea & Coffee, minimum value addition under Advance Authorization shall be 50%. Similarly, in case of spices {covered by Chapter 9 of (ITC(HS)}, duty free import of spices shall be permitted only for value addition purposes like crushing / grinding /sterilization or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc. Advance Authorization can also be issued for annual for Annual Requirement . Status Certificate holder and all other categories of exporters having past export performance (in preceding two years) shall be entitled for Advance Authorization for Annual Requirement. Entitlement in terms of CIF value of imports shall be up to 300% of the FOB value of physical export and / or FOR value of deemed export in preceding licensing year or Rs 1 crore, whichever is higher.

DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. DGFT, by means of Public Notice, may exclude any product(s) from purview of DFIA. This scheme is in force from 1st May, 2006. A minimum 2 0% value addition shall be required for issuance of such authorization. Items for which higher value addition is prescribed under Advance Authorization Scheme, shall be applicable. Transferability Once export obligation has been fulfilled, request for transferability of Authorization or inputs imported against it may be made before concerned RA. Once, transferability is endorsed, Authorization holder may transfer DFIA or duty free inputs, except fuel and any other item(s) notified by DGFT. However, for fuel, import entitlement may be transferred only to companies which have been granted authorization to market fuel by Ministry of Petroleum and Natural Gas.

Objective of DEPB is to neutralize incidence of customs duty on import content of export product. Neutralization shall be provided by way of grant of duty credit against export product.