FOREIGN TRADE POLICY OR

EXIM POLICY 2004-09

 Introduction
• In the pre-independence period, India did not have any
clear-cut trade policy but in specific cases adopted only
import restrictions.
• After independence the Government adopted a trade
policy in order to provide for development and regulation
of foreign trade.
• For this in 1962, Foreign Trade (Development and
Regulation) Act was passed under which the export and
import policy is framed and trade is regulated.
• Under Exim Policy all exports and most of the imports have
been freed from control.
 Foreign Trade Policy
• The Foreign Trade Policy, 2004-09 is effected
from September 1, 2004.
• This policy clarifies that exports and imports
shall be free, except in cases where they are
regulated by the provisions of this policy or
any other law.
 Objectives
• There are two major objectives of the Foreign
Trade Policy:
• To double our percentage share of global
merchandise trade within the next five years;
and
• To act as an effective instrument of economic
growth by giving a thrust to employment
generation.
 Key Features of EXIM Policy
• Special Focus Initiatives
F.T.P. announced specific strategies (termed special
focus initiatives) for five sectors which have
significant export prospectus. These sectors are:
1. Agriculture
2. Handicrafts
3. Handlooms
4. Gems and Jewellery
5. Leather and footwear
The specific strategies or initiatives taken by
Government in these five sectors are:
– Vishesh Krishi Upaj Yojna for promoting the export of
fruits, vegetables, flowers, minor forest produce
– Import of gold of 18 carat and above shall be allowed under
the replenishment scheme.
– Duty free import of specified items for leather sector
increased to 5% of FOB value of export.
– Duty free import of handlooms and handicrafts sector has
been increased to 5% of FOB value of exports. A new
handicraft special economic zone shall be established.
• Assistance to States for Infrastructural
Development of Exports (ASIDE)
• Department of Commerce formulated a scheme
ASIDE for promoting exports in various states.
• States can get financial assistance for developing
infrastructure such as roads connecting production
centres with the ports, setting up of Container
Freight Stations, Creation of Export oriented
Industrial parks, development of minor ports etc.
• Market Access Initiative (MAI)
• Government provide financial assistance for
medium term export promotion efforts
• A whole range of activities can be funded under
MAI scheme like market studies, Sales
promotion campaigns, International
Departmental Stores, Publicity campaigns,
Participation in International Trade Fairs, Brand
Promotion etc.
• New Category of Star Export Houses:
• Export houses will be divided in to five
categories depending on their export
performance:
– One Star Export House : Rs.25 crores
– Two Star Export House : Rs. 100 crores
– Three Star Export House : Rs.500 crores
– Four Star Export House : Rs.1500 crore
– Five Star Export House : Rs.5000 crore
• Target Plus Scheme:
• High performing Star Export Houses shall be
entitled for a duty free credit based on
incremental exports substantially higher than
the general annual export target fixed.
• Setting up of Free Trade and Warehousing
Zones (FTWZs)
• A new scheme FTWZs has been introduced to
create infrastructure to facilitate the import and
export of goods and services with freedom to
carry out trade transactions in convertible
currencies.
• Units in the FTWZs qualify for all other benefits
as applicable for SEZ units.
• Benefits to Export Oriented Units (EOUs)
• EOUs shall be exempted from services tax in
proportion to their exported goods and
services. EOUs shall permitted to retain 100%
of export earning in EEFC account.
• Promote Service Export
• Service sector contribute more than 50% of the country’s GDP.
To promote service exports FTP advocates a number of steps:
– Served from India brand will be created to catapult India the world
over as a major global service hub.
– Duty-credit entitlement of service providers who earn foreign
exchange has been increased up to 10 percent of total foreign
exchange earned.
– Hotels and Restaurants can use their duty credit entitlement for
import of food items and alcoholic beverages.
– An exclusive export promotion council for services has been set up in
order to map opportunities in key market.
• Procedural simplification and Rationalization measures:
• All exporters with minimum turnover of 5 crores shall be
exempt from furnishing bank guarantee in any of the
schemes, so as to reduce transactional cost.
• All goods and services exported shall be exempt from
service tax.
• Validity of all licenses and entitlements issued under
various schemes increased to a uniform 24 months.
• Time bound introductions of Electronic Data Interface
(EDI) for export transactions.
• Other Measures:
• Import of second hand capital goods shall be
permitted without any age restriction.
• Financial assistance will be provided to exporters
for meeting their costs and legal expenses related
to trade matters like anti dumping action etc.
• Pragati Maidan of Delhi has been transformed
into a world class complex for foreign visitors and
traders.