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Foreign Trade Policy 2009-14

Dr. Anuj Sharma BIMTECH Greater Noida

Scenario (2009-11)

Total Exports (2010-11)

US $ 246 bn (Up by 37.5%)

Total Exports (2009-10)

US $ 176.5 bn (Down by 4.7%)

5%    Exporter’s worked at very low (4-5 %) margins Lakhs of workers lost jobs (13 lakhs. UNCTAD) .Scenario (2009-10)  India's merchandise exports fell for the 13 straight month (2008-09) In April-October 2009 . exports contracted by 26.

Long term policy objective   double India’s share in global trade by 2020. Achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March 2011.Objectives of EXIM Policy (2009-14)  Short term objective    Arrest and reverse the declining trend of exports Provide additional support to those sectors which have been hit badly by recession in the developed world.  In the remaining three years of this FTP the country should be able to come back on the high export growth path of around 25% per annum. .

carpets and G&J were benefited. Tripura. Meghalaya. Processed Agricultural Products and RMG EPCG scheme at zero duty and export obligation relaxed to 50% extended till March 2013. Mizoram. It is also being extended to sectors like Toys. Earlier exporters of handicrafts. handlooms. Assam. Nagaland.Major Decisions  DEPB scheme after series of extension finally comes to end  2 % Interest subvention extended till March 2013. Scope enlarged   To promote employment in North East export obligation under the EPCG Scheme shall be 25% of the normal export obligation (Arunachal Pradesh. Manipur. Sports Goods. and Sikkim) .

Cambodia. and Ukraine .   7 new markets are being added to FMS. Special Bonus Benefit Scheme to provide special assistance to specified sectors for 6 months as special assistance. Pharmaceutical and Chemical sectors. Aruba. The rate of duty credit is 1% of FOB value of exports. The support is given to Engineering. Austria. Special Focus Market Scheme (SFMS) to increase the competitiveness of exports with a geographical targeting. Myanmar. The scheme would provide additional @1% duty credit. Netherland Antilles. These countries are Algeria.

 46 new items are being added to MLFPS. DGFT has undertaken a through revision of Foreign Trade Policy / Handbook of Procedures. Vol. and protein concentrates & textured protein substances. These countries are Belize.1 to make it more user friendly. 7 new markets are being added to Special FMS).    . Chile. New items are being added to VKGUY. Morocco. These are roasted cashew kernel. Guatemala. Honduras. and Uruguay. El Salvador. 110 new items are being added to FPS list.

updated. Now these scrips shall be permitted to be utilized for payment of Excise Duty for domestic procurement. The present Policy allows scrips under different schemes of Chapter 3 of FTP for import of goods as per conditions of these Schemes. The towns of Firozabad for glassware. On DGFT website. a facility has been provided to search / enquire about the current Import Policy of an item by entering ITC (HS) Code.   . DGFT has published a new. These are Ahmedabad & Kolhapur(Textiles) and Shaharanpur (Handicrafts) (2012-13). ITC (HS) classification of Export and Import items. Bhubaneswar for marine products and Agartala for bamboo and cane products have been notified as town of export excellence (2011-12). 3 new towns are being declared as TEE.

an ‘e-RCMC’ initiative has been commenced. In furtherance of the EDI initiatives now Advance Authorization. EPCG and DFIA are completely EDI enabled. MAI. To remove redundancy of repeated submissions of RCMC. . Under this. it has been a great success story.  EOU allowed to sell 90% of products in DTA. the EPCs would upload the RCMC data of their members on DGFT’s website only once Application under EPCG simplified Fee slashed under FPS. MDA  Enhanced ECGC cover at 95% to adversely effected sectors to continue. Reduction in transaction cost     From on line filing of application to electronic issuance of licenses. FMS.

Foreign Trade Policy is described in following documents.  Foreign Trade Policy (2009-14) Handbook of Procedures (Vol 1)   Handbook of Procedures (Vol 2) ITC (HS) Classification of Import-Export items  I Schedule – Import Policy  II Schedule – Export Policy  .

STPs. 1c board of trade Chapter 2 General provisions Chapter 3 Promotional Measures Chapter 4 Duty exemption / Remission schemes Chapter 5 Export Promotion Capital Goods Scheme Chapter 6 EOUs. EHTPs. 1b special focus initiatives. BTPs Chapter 7 SEZs.Framework of Foreign Trade Policy         Chapter 1 Legal framework. 7a Free Trade & warehousing zones Chapter 8 Deemed exports .

Duty Exemption / Remission Scheme (Chapter 4) I. Duty Exemption Scheme   Advance Authorisation (15% VA) Duty Free import Assistance [DFIA] II. Duty Remission Scheme  DEPB  Duty Drawback .

  .   Obtain the Tariff Classification of goods Compute the  Basic Customs Duty  Surcharge  Additional Duty of Customs (equal to excise duty)  Special Additional Duty Determine if there are any additional levies under different statutes Whether there are concessions and exemptions available on the item.Steps in determining the amount of duty payable.

 It requires 15 % (earlier positive value) addition. .Duty Exemption/Remission Scheme: A) Advance Authorization B) DFIA Advance Authorization  It is issued to allow duty free import of input as in SION which are physically used in the export of product  Duty free import of mandatory spares upto 10 % of CIF value of authorisation are also allowed  It is issued to a) Manufacturer Exporter b) Merchant Exporter  It is used on actual user condition.

20% value addition .   Validity is 24 months which can be extended by another 6 months Advance authorisation for annual requirement Status Certificate holder & exporters having past export performance Period of Export Obligation is 24 months which can be extended by 6 months and one year.  Issued both in pre export and post export basis  Min. DFIA  It is issued to allow duty free import of inputs for production of export product.

 It is valid for 24 months from date of issuance. It should be at specified port. Transferability is allowed after fulfillment of export obligation. It shall be subject to payment of additional custom duty which would be reimbursed to exporter as drawback. which shall be the port where exports have been made. DEPB Scheme  Objective is to neutralize effect of customs duty on import content of export product  Credit shall be available against export products at rates specified by DGFT which may be utilized for payment of Custom duty on freely importable items.  It is freely transferable. .

For SSI – 6 times – 8 yr Issued on actual user condition Export obligation shall be over and above average level of exports achieved in preceding 3 yrs Technological up gradation Min. 40% of exports Facility available only once and min. 5 yrs from date of issuance. plastics. . chemicals and leather products.EPCG Scheme (Chapter 5)  It allows import of capital goods at 0%(Earlier 3%) custom duty subject to an export obligation equivalent to 6 times of duty saved to be fulfilled in 6 years for following sectors  Engineering & electronic products. handicrafts. import to be made is 10% of existing investment in plant. min.      In agro units – 6 times – 12 yr. apparels & textiles. chemicals & pharmaceuticals.

Promotional Measures (Chapter – 3)          Assistance to States for Infrastructure Development of Exports [ASIDE] Market Access Initiative [MAI] Marketing Development Assistance [MDA] Towns of Export Excellence [TEE] Export and Trading Houses [Status certificate] Served from India Scheme [SFIS] Vishesh Krishi and Gram Udyog Yojana [VKGUY] Focus Market Scheme [FMS] Focus Products Scheme [FPS] .

Promotional Measures ASIDE Its objectives are to develop infrastructure. sales promotion campaigns.  Activities like market studies. ASEAN. Australia and New Zealand . participation in trade fairs etc. creation of export promotion parks etc. setting showrooms. setting ICD. can be funded MDA  Range of export promotion activities implemented by EPCs.  Financial grant is available to exporters traveling to Latin America. Africa. MAI  It is intended to provide financial assistance for medium term export promotion efforts. CIS.

 Hotels and restaurants can use their duty credit entitlements for import of food items and alcoholic beverages.SFIS [earlier duty-free entitlement certificate (DFEC) scheme ]  To accelerate growth in export services  Individual service providers who earn foreign exchange of at least Rs 5 lakh and other service providers who earn forex of at least Rs 10 lakh will be eligible for a duty credit entitlement of 10 % of the forex earned by them. whereas in the case of hotels. the entitlement would be 20 %.  In case of stand-alone restaurants. it would be 5 %. . VKGUY The objective of the Scheme is to promote export of agricultural produce and their value added products. and Gram Udyog products by providing incentives to exporters of such products.

0 % of the FOB value of exports of all products to the notified countries.  It allows duty credit facility at 3. Focus Market Scheme  Objective is to offset high freight cost and other externalities to select international markets with a view to enhance our export competitiveness in these countries.Exporter shall be entitled duty credit equivalent to 5% of FOB All status holders will receive duty credit of 10% which can be used for duty free import of capital goods meant for agroprocessing.  The DGFT has specified eight countries from the Latin American block and 49 countries from the African block .

Focus Product Scheme  Objective is to incentivise export of such products which have high employment intensity in rural and semi urban areas.  Export of notified products shall be entitled for duty credit of 2. Agriculture & Fisheries (Rs 150 Cr).    Financial assistance under MAI scheme. .0% of FOB value Towns of Export Excellence [TEE] 750 Crore  Handloom. on priority basis Service Providers in these areas shall be entitled for EPCG scheme Financial assistance under ASIDE. Handicraft.

Permits import of capital goods and inputs without payment of duty  .EOU / EHTP/ STP/ BTP Scheme (Chapter 6)  Units undertaking to export their entire production of goods and services except permissible sales in Domestic Tariff Area (DTA) are known as Export Oriented Units (EOUs).

Additional duty credit scrip @ 1 % of the FOB of past export shall be granted for specified product groups Status Category Export Performance (Rupees in Crores)    Export House (EH) 20 Trading House(TH) 500 Premier Trading House Star Export House (SEH) 100 Star Trading House (STH) 2500 (PTH) 10000 .Incentive to Status Holder       Custom clearance on self declaration basis Fixation of I-O norm on priority basis within 60 days Exemption from compulsory negotiation of documents through banks 100% retention of foreign exchange Enhancement from normal repatriation from 180 to 360 days.

Benefits  Advance Authorisation / DFIA  Export drawback  Exemption from Excise Duty .Deemed Exports (Chapter 8)   Goods supplied do not leave country and payment is received in Indian Rupees or in Free Foreign Exchange.