Foreign trade Policy & Export

Promotion Schemes
Unit 4
 Context
• For INDIA to become a major player in world
trade, an all encompassing, comprehensive
view needs to be taken for the overall
development of the country’s foreign trade.
While increase in imports is of vital
importance, we have also to facilitate those
exports which are required to stimulate our
economy.
 • Thus, it is necessary to go
Context much beyond and take an
integrated approach to the
requirements of INDIA’S
foreign trade. This is the
context of the new
Foreign Trade Policy.
 Objectives
• Trade is not an end in itself, but a means to
economic growth and national development.
The primary source is not the mere earning of
foreign exchange, but the stimulation of
greater economic activity. The foreign trade
policy is rooted in this belief and built around
two major objectives. These are:
 Objectives
 To double our percentage share of global
merchandise trade within next five years;

 To act as an effective instrument of economic

growth by giving a thrust to employment
generation.
 Strategy To Achieve The
Objectives
• Bring down transaction cost– Simplified
procedure,
• Unshackling of controls, built-in
transparency & mutual trust;
• India to be a Global hub for Manufacturing,
Trading & Services;
• Special Focus area Initiatives;
 Strategy To Achieve The
Objectives
Facilitating Technological & Infra-structural up
gradation;
• Neutralizing incidence of all levies & duties
on inputs—
• Duties & Levies should not be exported.
 FOREIGN TRADE POLICY
2015-20
FOREWORD
• EXPORT
• Exports during August, 2015 were valued at US $21266.31 million (Rs.138384.74 crore) which was
20.66 per cent lower in Dollar terms (15.22 per cent lower in Rupee terms) than the level of US
$26803.48 million (Rs.163220.33 crore) during August, 2014.Cumulative value of exports for the
period April-August 2015-16 was US $111094.47 million (Rs 708933.92 crore) as against US
$132529.64 million (Rs 796013.40 crore) registering a negative growth of 16.17 per cent in Dollar
terms and 10.94 per cent in Rupee terms over the same period last year.

• IMPORTS
Imports during August, 2015 were valued at US $33744.28 million (Rs. 219581.77 crore) which was
9.95 per cent lower in Dollar terms and 3.77 per cent lower in Rupee terms over the level of
imports valued at US $37472.78 million (Rs. 228191.26 crore) in August, 2014. Cumulative value of
imports for the period April-August 2015-16 was US $168610.56 million (Rs 1076178.14 crore) as
against US $190747.68 million (Rs 1145604.44 crore) registering a negative growth of 11.61 per
cent in Dollar terms and 6.06 per cent in Rupee terms over the same period last year.
 D. TRADE BALANCE

• The trade deficit for April-August, 2015-16

was estimated at US $57516.09 million which
was lower than the deficit of US $58218.04
million during April-August, 2014-15.
• C. CRUDE OIL AND NON-OIL IMPORTS:
• Oil imports during August, 2015 were valued at US $7357.47 million which
was 42.59 per cent lower than oil imports valued at US $12814.77 million
in the corresponding period last year. Oil imports during April-August,
2015-16 were valued at US $41502.37 million which was 38.79 per cent
lower than the oil imports of US $67805.81 million in the corresponding
period last year.
• Non-oil imports during August, 2015 were estimated at US $26386.81
million which was 7.01 per cent higher than non-oil imports of US
$24658.01 million in August, 2014. Non-oil imports during April-August,
2015-16 were valued at US $127108.19 million which was 3.39 per cent
higher than the level of such imports valued at US $122941.87 million in
April-August, 2014-15.
• INDIA’S FOREIGN TRADE (SERVICES): July, 2015
• (As per the RBI Press Release dated 15th September, 2015)
• A. EXPORTS (Receipts)

• Exports during July, 2015 were valued at US $ 13386 Million (Rs. 85181.81
Crore).
• B. IMPORTS (Payments)

• Imports during July, 2015 were valued at US $ 7502 Million (Rs. 47738.98
Crore).
• C. TRADE BALANCE

• The trade balance in Services (i.e. net export of Services) for July, 2015
was estimated at US $ 5884 Million.
 • No export or import is
Importer-
allowed to be made without
exporter an importer- exporter
code code(IEC) number unless
specifically exempted.
Number Custom authorities will not
(IEC) allow any person to import
or export goods or from
India unless he holds valid
IEC.
 • For the purpose of licensing
Categories
or otherwise, importers can
of be divided into following
importers: broad categories:
Categories of Exporters:
PROMOTIONAL SCHEMES
Assistance to • Scheme for Assistance to
States for States for Infrastructure
Development of Exports
Infrastructure
(ASIDE) is formulated to
Development encourage State
for Exports Governments to participate
(ASIDE) in promoting exports, and
is administered by
Department of Commerce
(DoC).
Objectives of ASIDE include:
 Objectives of ASIDE include:

Details of ASIDE are available at http://commerce.nic.in.

 • MAI scheme is intended to
Market provide financial assistance
Access for medium term export
promotion efforts with sharp
Initiative focus on a country / product,
(MAI) and is administered by DoC.
• Financial assistance is
available for Export
Promotion Councils (EPCs),
Industry and Trade
Associations (ITAs),
Agencies of State
Governments, Indian
Commercial Missions (ICMs)
abroad and other eligible
entities as may be notified.
A whole range of activities funded under
MAI scheme. These include,
Contd…

Full text of guidelines is available at http://commerce.nic.in.

 Marketing • MDA Scheme is intended to
provide financial assistance
Development for a range of export
Assistance promotion activities
(MDA) implemented by EPCs, ITAs
on a regular basis every year.
The scheme is administered
by DoC.

Assistance includes, amongst others, participation in

(i) Trade Fairs and Buyer Seller meets abroad or in
India, and
(ii) Export promotion seminars.
• Financial assistance with travel grant is
available to exporters traveling to Latin
America, Africa, CIS region, ASEAN
countries, Australia and New Zealand. In other
areas, financial assistance without travel grant
is available. MDA assistance is available for
exporters with annual export turnover upto Rs
15 Crores. Full text of guidelines is available at
http://commerce.nic.in.
 • Merchant as well as
Manufacturer Exporters,
Service Providers, Economic
EXPORT Zones (SEZs), Agri Export
AND Zones (AEZs), Electronic
Hardware Technology Parks
TRADING
(EHTPs), Software
HOUSES Technology Parks (STPs) and
Bio-Technology Parks
(BTPs) shall be eligible for
Status.
Status
 • Services include all 161
SERVICES
tradable services covered
EXPORTS under General Agreement on
Trade in Services (GATS)
where payment for such
services is received in free
foreign exchange. A list of
services is given in
Appendix-10 of HBP v1.
List of Services
Communication services
Distribution services
Educational services
Services
Transport services
 • Software exporters shall
Registration register themselves with
cum Electronics and Software
EPC. Exporters of 14 specific
Membership services listed in Sl. No. 34
Certificate of Appendix-2 of HBP v1 are
required to register
(RCMC) themselves for with Services
EPC. Other service exporters
Service shall register themselves with
Providers Federation of Indian
Exporters Organization
(FIEO).
SERVED FROM INDIA SCHEME (SFIS)
VISHESH KRISHI AND GRAM
UDYOG YOJAN(VKGUY)
(SPECIAL AGRICULTURE AND
VILLAGE INDUSTRYSCHEME)
Objectives
 Entitlement

Duty Credit scrip benefits are granted

with an aim to compensate
high transport costs. Exporters, of
products notified in Appendix
37A of HBP v1, shall be entitled for
Duty Credit scrip equivalent to
5% of FOB value of exports (realized in
free foreign exchange).
Following exports shall not be
taken into account for Duty
Credit
scrip entitlement.
FOCUS MARKET SCHEME
(FMS)
Following exports shall not be taken into
account for computation of entitlement:
Contd…
FOCUS PRODUCT SCHEME
(FPS)
 • Exports of notified products (as in
Entitlemen
Appendix 37D of HBP v1) to all
t
countries (including SEZ units)
shall be entitled for Duty Credit
scrip equivalent to 1.25% of FOB
value of exports for each licensing
year commencing from 1st April,
2006.
High-tech
Products
export
promotion
Scheme
 • Duty Exemption Schemes enable
DUTY duty free import of inputs required
for export production. Duty
EXEMPTIO Exemption Schemes consist of
N& • a) Advance Authorization and
• (b) Duty Free Import Authorization
REMISSIO (DFIA).
N • A Duty Remission Scheme enables
post export replenishment /
SCHEMES remission of duty on inputs used in
export product. Duty Remission
Schemes consist of (a) Duty
Entitlement Passbook Scheme
(DEPB) and (b) Duty Drawback
(DBK) Scheme.
 • Goods exported under
Re-import of Advance Authorization /
exported DFIA / DEPB may be re-
imported in same or
goods under substantially same form
Duty subject to DoR specified
Exemption / conditions.

Remission
Scheme
 • Value addition (VA) for the
purpose of this Chapter
(Except for Gems and
Jewellery Sector) shall be:-
Value A-B
Addition VA = ————— x 100, where
B
• A = FOB value of export
realized / FOR value of supply
received.
• B = CIF value of inputs
covered by authorization, plus
any other imported materials
used on which benefit of DBK
is claimed.
 • An Advance Authorization is
ADVANCE issued to allow duty free
import of inputs, which are
AUTHORIS physically incorporated in
ATION export product (making
normal allowance for
SCHEME wastage). In addition, fuel, oil,
energy, catalysts which are
consumed / utilized to obtain
export product, may also be
allowed. DGFT, by means of
Public Notice, may exclude
any product(s) from purview
of Advance Authorization.
 • Holder of Advance
Authorization, Advance
Authorization for annual
Back-to- Inland requirement, DFIA and
Back Letter Diamond Imprest
Authorization may, instead of
of Credit applying for an ARO or
Invalidation letter, avail of the
facility of Back-to-Back
Inland Letter of Credit in
accordance with procedure
specified in HBP v1.
 • Objective of DEPB is to
Duty neutralize incidence of customs
Entitlement duty on import content of
export product. Component of
Passbook Special Additional Duty and
(DEPB) customs duty on fuel shall also
be allowed under DEPB(as
Scheme brand rate) factored in DEPB
rate in case of non-availment of
CENVAT credit. Neutralization
shall be provided by way of
grant of duty credit against
export product.
 • DFIA is issued to allow duty
free import of inputs, fuel, oil,
energy sources, catalyst which
DUTY are required for production of
FREE export product. DGFT, by
means of Public Notice, may
IMPORT exclude any product(s) from
AUTHORIS purview of DFIA. This
scheme is in force from 1st
ATION May, 2006.
(DFIA)
SCHEME
 • These Authorization shall be
issued only for products for
which Standard Input and
Entitlement Output Norms (SION) have
been notified. In case of post
export DFIA, a merchant
exporter shall be required to
mention only name (s) and
address(s) of manufacturer(s)
of the export product(s).
Applicant is required to file
application to concerned RA
before effecting exports under
DFIA.
 • A minimum 20% value
addition shall be required for
issuance of such authorization
Value except for items in gems and
Addition jewellery sector for which
value addition would be as per
paragraph 4A.2.1 of HBP v1.
Items for which higher value
addition is prescribed under
Advance Authorization
Scheme, shall be applicable.
 • EPCG scheme allows import
EXPORT of capital goods for pre
PROMOTIO production, production and
post production (including
N CAPITAL CKD / SKD thereof as well as
GOODS computer software systems) at
(EPCG) 3% Customs duty, subject to
an export obligation
SCHEME 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.
EXPORT
ORIENTED UNITS
(EOUs),
ELECTRONICS
HARDWARE
TECHNOLOGY
PARKS (EHTPs),
SOFTWARE
TECHNOLOGY
PARKS
(STPs) AND BIO-
TECHNOLOGY
PARKS (BTPs)
 • Units undertaking to export their
entire production of goods and
services (except permissible sales
in DTA), may be set up under the
Export Oriented Unit (EOU)
Scheme, Electronic Hardware
Technology Park (EHTP)
Scheme, Software Technology
Park (STP) Scheme or Bio-
Technology Park (BTP) Scheme
for manufacture of goods,
including repair, re-making,
reconditioning, re-engineering and
Eligibility rendering of services. Trading
units are not covered under these
schemes.
 • An EOU / EHTP / STP / BTP unit may

Export and export all kinds of goods and services except

items that are prohibited in ITC (HS).

Import of • An EOU / EHTP / STP / BTP unit may

goods import and / or procure, from DTA or
bonded warehouses in DTA / international
exhibition held in India, without payment of
duty, all types of goods, including capital
goods, required for its activities, provided
they are not prohibited items of import in
the ITC (HS).

• EOU / EHTP / STP / BTP units may

import / procure from DTA, without
payment of duty, certain specified goods for
creating a central facility. Software EOU /
DTA units may use such facility for export
of software.
• An EOU engaged in agriculture, animal
husbandry,aquaculture, floriculture,
horticulture, pisciculture,
viticulture,poultry or sericulture may be
permitted to remove specified goods in
connection with its activities for use
outside bonded area.
• Gems and jewellery EOUs may source
gold / silver / platinum through
nominated agencies on loan / outright
purchase basis. Units obtaining gold /
silver / platinum from nominated
agencies, either on loan basis or outright
purchase basis shall export gold / silver /
platinum within 90 days from date of
Application & Approvals
Inter Unit Transfer
Exit from EOU scheme.
 • In case of units under EHTP /
Approval STP Schemes, necessary
under approval /permission by
officer designated by
EHTP/STP Ministry of Communication
and Information Technology,
Department of Information
Technology, instead of
Development Commissioner,
and by Inter-Ministerial
Standing Committee (IMSC)
instead of BoA.
 • “Deemed Exports” refers to
those transactions in which
goods supplied do not leave
DEEMED country, and payment for
EXPORTS such supplies is received
either in Indian rupees or in
free foreign exchange.
Categories of Supply
Benefits for Deemed Exports
 Benefits to
Categories •Benefits
1.Supplies made against
suppliers
Advance 1. Advance Authorization / DFIA for intermediate
supplies.
the Supplier Authorization /
DFIA
2. Deemed Export Drawback
2.Supplies are made against
•Exemption from terminal excise duty
Advance Release Order
(ARO) or Back to Back Letter
of Credit 3. Advance authorization
•Deemed Export Drawback
Supply of goods to EOU /
3. •Exemption from terminal excise duty
EHTP / STP / BTP
4. Advance authorization
•Deemed Export Drawback
4. Supply of capital goods
•Exemption from terminal excise duty

6. new refineries •deemed export benefits

5 Supplies to projects 5. Deemed export benefits
funded by agencies

6. Supply of capital goods, 6. Advance authorization

including in • Deemed Export Drawback
unassembled /
disassembled condition,
7. Deemed export benefits
7. Supply of Capital goods
and spares upto 10% of
FOR value of capital
goods to power projects
8. Deemed export benefits
8. Supplies to new
refineries 9. Advance authorization
• Deemed Export Drawback
9. Supplies made to
Nuclear Power Projects