Foreign Trade Policy

Aka EXIM policy and Trade policy By Shalini Singh

INTRODUCTION
Foreign Trade (Development and Regulation) Act, 1992 As per the provisions of the Act, the Government : (i) may make provisions for facilitating and controlling foreign trade (ii) may prohibit, restrict and regulate exports and imports (iii) is authorised to formulate and announce an export and import policy and also amend the same from time to time, by notification in the Official Gazette (iv) is also authorized to appoint a 'Director General of Foreign Trade'

INTRODUCTION
Ministry of Commerce and Industry The announcement of a new Foreign Trade Policy for a five year period of 2009-2014 replacing the hitherto nomenclature of EXIM Policy by Foreign Trade Policy (FTP)

Strategies for achieving objectives

Unshackling of controls and creating an atmosphere of trust and transparency Simplifying procedures and bringing down transaction costs Neutralizing incidence of all levies on inputs used in export products Facilitating development of India as a global hub for manufacturing, trading and services Identifying and nurturing special focus areas to generate additional employment opportunities, particularly in semiurban and rural areas Facilitating technological and infrastructural up gradation of the Indian economy, especially through import of capital goods and equipment

Strategies for achieving objectives

Upgrading the infrastructure network related to the entire foreign trade chain to international standards Revitalizing the Board of Trade by redefining its role and inducting into it experts on trade policy Activating Indian Embassies as key players in the export strategy

Avoiding inverted duty structure and ensuring that domestic sectors are not disadvantaged in trade agreements

SPECIAL FOCUS INITIATIVES

Market Diversification: 26 new countries have been included within the ambit of Focus Market Scheme. The incentives provided under Focus Market Scheme have been increased from 2.5% to 3%. There has been a significant increase in the outlay under Market Linked Focus Product Scheme by inclusion of more markets and products. This ensures support for exports to all countries in Africa

SPECIAL FOCUS INITIATIVES

Technological Upgradation EPCG Scheme at zero duty has been introduced for certain engineering products, electronic products ,basic chemicals and pharmaceuticals, apparel and textiles, plastics, handicrafts, chemicals and allied products and leather and leather products. The existing 3 % EPCG Scheme has been considerably simplified A number of products including automobiles and other engineering products have been included for incentives under Focus Product, and Market Linked Focus Product Schemes. Steps to encourage Project Exports shall be taken.

SPECIAL FOCUS INITIATIVES

Support to status holders Additional duty credit scrip @ 1 % of the FOB of past export shall be granted for specified product groups including leather, specific sub sectors in engineering, textiles, plastics, handicrafts and jute. This duty credit scrip can be used for import of capital goods by these status holders. The imported capital goods shall be subject to actual user condition.

Agriculture and Village Industry

Vishesh Krishi and Gram Udyog Yojana Capital goods imported under EPCG will be permitted to be installed anywhere in AEZ. Import of restricted items, such as panels, are allowed under various export promotion schemes. Import of inputs such as pesticides are permitted under Advance Authorization for agro exports. New towns of export excellence with a threshold limit of Rs 150 crore shall be notified. Certain specified flowers, fruits and vegetables are entitled to a special duty credit scrip, in addition to the normal benefit

Handlooms

Specific funds are earmarked under MAI / MDA Scheme for promoting handloom exports. Duty free import entitlement of specified trimmings and embellishments is 5 % of FOB value of exports during previous financial year. Duty free import entitlement of hand knotted carpet samples is 1 % of FOB value of exports during previous financial year. Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair is permitted. New towns of export excellence with a threshold limit of Rs 150 crore shall be notified. Machinery and equipment for effluent treatment plants is exempt from customs duty.

Handicrafts

Duty free import entitlement of tools, trimmings and embellishments is 5 %of FOB value of exports during previous financial year Handicraft EPC is authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom directly importing may not be viable. Specific funds are earmarked under MAI & MDA Schemes for promoting Handicraft exports. New towns of export excellence with a reduced threshold limit of Rs 150 crore shall be notified. Machinery and equipment for effluent treatment plants are exempt from customs duty. All handicraft exports would be treated as special Focus products and entitled to higher incentives.

Gems & Jewellery

Import of gold of 8 k and above is allowed under replenishment scheme Duty Free Import for: 1. Jewellery made out of: (a) Precious metals (other than Gold &Platinum) 2% (b) Gold and Platinum 1% (c ) Rhodium finished Silver 3% 2. Cut and Polished Diamonds 1% (d) Duty free import entitlement of commercial samples shall be Rs. 300,000. (e) Personal carriage of Gems & Jewellery products in case of holding/participating in overseas exhibitions increased to US$ 5 million to US$ 1

Leather and Footwear

Duty free import entitlement of specified items is 3% of FOB value of exports of leather garments Machinery and equipment for Effluent Treatment Plants shall be exempt from basic customs duty CVD is exempted on lining and interlining material, raw, tanned and dressed fur Re-export of unsold hides, skins and semi finished leather shall be allowed from Public Bonded warehouse at 50% of the applicable export duty

Marine Sector
Imports for technological up gradation under EPCG in fisheries sector (except fishing trawlers, ships) exempted from maintaining average export obligation. (b) Duty free import of specified specialized inputs / chemicals and flavoring oils is allowed to the extent of 1% of FOB value of preceding financial years export. (c) To allow import of monofilament long line system for tuna fishing at a concessional rate of duty and Bait Fish for tuna fishing at Nil duty. (e) Marine products are considered for VKGUY

Electronics and IT Hardware Mfg Industries

Expeditious clearance of approvals required from DGFT shall be ensured Exporters /Associations would be entitled to utilize MAI & MDA Schemes for promoting Electronics and IT Hardware Manufacturing industry exports.

Sports Goods and Toys

Duty free import of specified specialized inputs allowed to the extent of 3 % of FOB value of preceding financial years export. Sports goods and toys shall be treated as a Priority sector under MDA / MAI Scheme. Specific funds would be earmarked under MAI /MDA Scheme Applications relating to Sports Goods and Toys shall be considered for fast track clearance by DGFT. Sports Goods and Toys are treated as special focus products and entitled to higher incentives.

Green products & technologies

Focus would be on items relating to transportation, solar and wind power generation and other products as may be notified which will be incentivized under Reward Schemes

Board of Trade- objectives

Commerce & Industry Minister will be the Chairman of the Board of Trade (BOT). Government shall also nominate up to 25 persons, of whom at least 1 0 will be experts in trade policy. Objectives: To advise Government on Policy measures for preparation and implementation of both short and long term plans for increasing exports To review export performance of various sectors, identify constraints and suggest industry specific measures to optimize export earnings To examine existing institutional framework for imports and exports and suggest practical measures for further streamlining to achieve desired objectives

GENERAL PROVISIONS RDG. IMPORTS & EXPORTS

Exports and Imports shall be free, except where regulated free unless regulated by FTP or any other law in force Import / export of arms and related material from / to Iraq shall be prohibited Every exporter or importer shall comply with the provisions of FT (D&R) Act Any goods, export or import of which is restricted under ITC(HS) may be exported or imported only in accordance with an Authorization

PROMOTIONAL MEASURES
Scheme for Assistance to States for Developing Export for Developing Export Infrastructure and Allied Activities (ASIDE) : Creation of new Export Promotion Industrial Parks/Zones (SEZs/Agri Business Zones) and augmenting facilities in the existing ones. Setting up of electronics and other related infrastructure in export conclave. Equity participation in infrastructure projects including the setting up of SEZs. Meeting requirements of capital outlay of EPZs/SEZs Development of complementary infrastructure such as, roads connecting the production centers with the ports etc. & stabilizing power supply through additional transformers and islanding of export production

PROMOTIONAL MEASURES
MAI scheme: Activities funded under this scheme: Market studies/surveys Setting up of showroom / warehouse Participation in international trade fairs Displays in International departmental stores Publicity campaigns, Brand promotion Reimbursement of registration charges for pharmaceuticals and expenses for carrying out clinical trials etc., in fulfillment of statutory requirements in the buyer country Testing charges for engineering products abroad Assistance for contesting Anti Dumping litigations

PROMOTIONAL MEASURES
MDA Scheme: financial assistance is provided: Trade Fairs and Buyer Seller meets abroad or in India Export promotions seminars. Financial assistance with travel grant is available to exporters traveling to focus areas, viz., Latin America, Africa, CIS region, ASEAN countries, Australia and New Zealand

PROMOTIONAL MEASURES
Towns of Export Excellence (TEE) Selected towns producing goods of Rs. 750 Crore or more will be notified as TEE based on potential for growth in exports. However for TEE in Handloom, Handicraft, Agriculture and Fisheries sector, threshold limit would be Rs 150 Crores Common Service Providers in these areas shall be entitled for EPCG scheme

PROMOTIONAL MEASURES
EXPORT AND TRADING HOUSES: Merchant as well as Manufacturer Exporters, Service and Trading Houses Providers, Export Oriented Units (EOUs) and Units Status located in Special Economic Zones (SEZs), Agri Export Zones (AEZs), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and BioTechnology Parks (BTPs) shall be eligible for status

PROMOTIONAL MEASURES
SERVICES EXPORTS: Software exporters shall register themselves with Membership Certificate Electronics and Software EPC Government shall promote establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering & Architectural Design, Multi-media operations, Software developers etc., in State and District level towns

REWARD / INCENTIVE SCHEMES IN DGFT

SERVED FROM INDIA SCHEME (SFIS):

Objective is to accelerate growth in export of services so as to create a powerful and unique Served From India' brand, instantly recognized and respected world over. All Indian Service Providers, of services listed in Appendix 1 0, who have free foreign exchange earning of at least Rs. 10 Lakhs in preceding financial year / current financial year shall qualify for

DUTY EXEMPTION & REMISSION SCHEMES

Duty exemption schemes enable duty free import of inputs required for export production. Duty Exemption Schemes consist of (a) Advance Authorization scheme and (b) Duty Free Import Authorization (DFIA) scheme. A Duty Remission Scheme enables post export replenishment / remission of duty on inputs used in export product. Duty Remission Schemes consist of (a) Duty Entitlement Passbook (DEPB) Scheme and (b) Duty Drawback (DBK) Scheme