Foreign Trade Policy: 2015-2020

Foreign Trade Policy 2015-2020

I

General Overview

II

Changes in Reward Scheme

III

Anomaly in Deemed Exports

IV

Changes in Advance Authorisation/Duty Free Import

Authorisation Scheme

Changes in Export Promotion Capital Goods

Scheme

VI

Changes in EOUs, EHTP and STPs

VII

Other Key and Procedural Changes

VIII

Quality Complaints and Trade Disputes

Foreign Trade Policy 2015-2020

IX

Forthcoming E-governance initiatives

I-General Overview

Foreign Trade Policy-General Overview

The Foreign Trade Policy, 2015-2020 (FTP) notified by Central Government in exercise of the powers conferred under
Section 5 of the Foreign Trade (Development & Regulation) Act, 1992.

FTP, 2015-2020, incorporating provisions relating to export and import of goods and services, shall come into force with
effect from the date of notification and shall remain in force up to 31st March, 2020, unless otherwise specified.

Directorate General of Foreign Trade (DGFT) has in place a Citizens Charter, giving time schedules for providing various
services to clients.

DGFT is implementing the Niryat Bandhu Scheme for mentoring new and potential exporter on the intricacies of foreign
trade through counselling, training and outreach programmes.

Reward Schemes simplified and expanded.

Online filing of documents introduced with respect to various schemes of FTP to reduce paper burden.

Concept of Deemed Export introduced in chapter 7 erstwhile it was mentioned in chapter 8.

OBJECTIVE OF FTP

Trade facilitation is a priority of the Government for cutting down the transaction cost and time, thereby rendering Indian
exports more competitive. The various provisions of FTP and measures taken by the Government in the direction of trade
facilitation are consolidated under this chapter for the benefit of stakeholders of import and export trade.

II-Changes in Reward Schemes

Foreign Trade Policy-Reward Schemes (Contd.)

Service Export from India Scheme (SEIS)

Served from India Scheme (SFIS) has been replaced with SEIS scheme.

SEIS will apply to Service Providers located in India instead of Indian Service Providers

SEIS provides for rewards to all service providers of notified services who are providing services from India regardless of
constitution or profile of the service provider

Rate of reward under SEIS would be based on net foreign exchange earned.

Scrip issued would no longer be with actual user condition but be freely transferable

Scrip not restricted for usage of specified types of goods but can be used for all types of goods and services tax debits on
procurement of services/ goods.

Debits would be eligible for CENVAT credit or drawback.

Benefits can be availed by unit located in SEZ also. Earlier, benefits were not allowed to SEZ.

Foreign Trade Policy-Reward Schemes (Contd.)

SEZ taking
benefit of
SEIS
scheme is
still a
question?

Whether SEZ units can avail the benefits of the SEIS schemes mentioned under Chapter 3?

In para 3 of highlights of FTP, it is mentioned that SEZ units are now eligible for MEIS and SEIS
benefits. However, if we look into the policy the para 3.09 of FTP which deals with SEIS schemes
have still placed SEZ in the category of Ineligible categories.

Foreign Trade Policy-Reward Schemes

Merchandise Export from India Scheme (MEIS)

Five different schemes viz. Focus Product scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri.
Infrastructure Incentive scrip, VKGUY have been merged into a single scheme namely MEIS and there would no
conditionality attached to the scrips issued under the scheme.

Rewards for export of notified goods to notified markets under MEIS shall be payable as percentage of realised FOB value.

Debits towards basic customs duty in the transferable reward duty credit scrips would also be allowed adjustment as duty
drawback.

Benefits can be availed by unit located in Special Economic Zone (SEZ). However, trading units are not allowed to obtain
such benefits.

Scrips issued under MEIS would be fully transferable

Higher level of rewards under MEIS for export items with high domestic content and value addition

SEZ unit were not allowed

earlier to avail such
benefits.

Foreign Trade Policy-Reward Schemes (Contd.)

Merchandise Export from India Scheme (MEIS)
(contd.)

Wherever the reward under MEIS is available to all countries, proof of landing shall not be required to be submitted for
claiming the reward

If application is filed for exports made through EDI ports then hard copies such as application to DGFT, EDI shipping bills, eBRC and RCMC not required.

Application for obtaining MEIS shall be filed within period of:

12 months from the date of Let export order date or;

3 months form the date of :
- Uploading of EDI shipping bills onto DGFT server by customs
- Printing/ release of shipping bills for Non-EDI shipping bills
Whichever is later, in respect of shipments for which claim is being filed

Duty Credit Scrip shall be valid for period of 18 months form the date of issue and must be valid on the date on which actual
debit is made.

Declaration of intent mandatory for 01 June 2015 even for export shipments under chapter 4, 5 or chapter 6 of FTP.

10

Foreign Trade Policy-Reward Schemes (Contd.)

11

Merchandise Export from India Scheme (MEIS)

(contd.)

Export of goods through

courier or foreign post
using e-commerce

Export of goods through courier or foreign post using e-commerce of FOB value upto Rs. 25000 per
consignment shall be entitled for rewards under MEIS.
If the value of exports using e-commerce platform is more than Rs. 25000/- per consignment then
MEIS reward would be limited to FOB value of Rs. 25000 only.
Such goods can be exported in manual mode through Foreign Post Offices at New Delhi, Mumbai and
Chennai.
Export of such goods under courier regulations shall be allowed manually on pilot basis through
airports at Delhi, Mumbai and Chennai.

Foreign Trade Policy-Reward Schemes (Contd.)

12

Merchandise Export from India Scheme (MEIS)

(contd.)

Ineligible categories under

MEIS

The following exports categories shall be ineligible for duty credit scrip entitlement under MEIS:
EOU/EHTP/STPs/BTPs who are availing direct tax benefits/exemption
Supplies made from DTA units to SEZ units
Deemed exports
Exports through trans-shipment
SEZ/EOU/EHTP/BPT/FTWZ products exported through DTA units
Service export
Exports made by units in FTWZ
Items which are restricted or prohibited for export under schedule-2 of Export Policy in ITC
(HS)
Export products which are subject to minimum export price or export duty
Some eatable items such as cereals, sugar, milk and milk prodocuts, meat and meat products
etc.

Foreign Trade Policy-Reward Schemes (Contd.)

Focus
Product
Scheme

Focus
Market
Scheme

VKGUY
Merchandise
Exports from
India
Scheme

Agri.
Infrastructure
Incentive
Scrip

Market
Linked
Focus
Product
Scheme

13

Foreign Trade Policy-Other Changes under Chapter 3

14

Other Key Changes

Scrips issued under Export from India Schemes can be used for the following:
Payment of customs duty for import of inputs including capital goods

Utility of Scrips

Payment of excise duty on domestic procurement of inputs or goods including

capital goods
Payment of Service tax on procurement of Services

Validity of status holder

Status certificate issued under earlier FTP to an IEC holder shall remain valid till 30 June
2015 or till the issuance of status certificate to such IEC holder under this policy, whichever
is earlier

Foreign Trade Policy-Other Changes under Chapter 3

Other Key Changes (Contd.)

Grant of Double weightage

Now double weightage benefits shall be available for grant of one star export house
status category only.

Application Fee for Duty

Credit Scrip

Application for duty credit scrip under rewards/ incentive scheme would be Rs. 1000 now.

Schemes removed under

new policy

Market Access Initiatives, Market Development Assistance & Incremental Exports

Incentivisation schemes are removed now in new FTP

15

Foreign Trade Policy-Other Changes under Chapter 3

Other Key Changes (Contd.)

Nomenclature of Export
house

Self-certification by status
holders

The nomenclature of Export House, Star Export House, Trading House, Star Trading
House, Premier Trading House certificate has been changed to One, Two, Three, Four, five
star Export Houses.

Manufacturer who are status holders will be enabled to self-certify their manufactured
goods as originating from India with a view to qualify as preferential treatment under
different Preferential Trading Agreements, Free Trade Agreements, Comprehensive
Economic Cooperation Agreements and Comprehensive Economic Partnerships
Agreements which are in operation.

16

Foreign Trade Policy-Other Changes under Chapter 3 (Contd.)

17

Star Export Houses

Sr. No

Status Category

Export Performance FOB/FOR in US$ million during

current and previous two years

One Star Export House

Two Star Export House

25

Three Star Export House

100

Four Star Export House

500

Five Star Export House

2000

III-Foreign Trade Policy-Anomaly in Deemed

Exports (Chapter 7)

18

Foreign Trade Policy-Anomaly in Deemed Exports (Chapter 7)

19

Goods supplied to a project funded by JBIC/JICA have been taken out from the eligible list of deemed exports in the New
FTP.
Goods supplied Would it mean that the goods supplied to JBIC / JICA project prior to 31.03.2015 would be eligible as deemed exports
but the goods supplied to the same project after 01.04.2015 will not qualify as deemed export?
to JBIC/JICA

The goods supplied to an Advance Licence Holder against the invalidation letter shall not be eligible for refund of TED as
upfront exemption is available under Notification No. 44/2001-CE (NT).
Goods supplied by AA Holder to EOUs or supplied as other deemed exports are not covered under Notification No.
Goods supplied
44/2001-CE (NT). Goods supplied to DFIA holder are not covered under 44/2001. What about TED in such cases?
to an AA

Whether the goods supplied by an EOU to the eligible projects under ICB be eligible for refund of TED as the exemption
from excise duty on the goods supplied under ICB is not applicable to an EOU?
Goods supplied
by EOU

Foreign Trade Policy-Anomaly in Deemed Exports (Chapter 7)

(Contd.)

20

The goods supplied by a manufacturer as deemed export are eligible for deemed export drawback at all industries
rates of duty drawback if no Cenvat credit is taken but it is not eligible for customs portion of duty drawback at all
industries rates if Cenvat credit is taken. Why this discrimination?
Goods supplied
by Manufacturer

Bill to ship to
model

Goods supplied by a manufacturer directly to the eligible categories of deemed export are entitled for deemed export
benefits but in case the same are supplied directly from the factory by the manufacturer to the eligible category but
through a third party (on bill to ship to model) the benefits are not available. Why?

All these anomalies are contrary to the spirit of Make in India concept announced in Foreign Trade Policy,
2015-2020.

IV-Changes in Advance Authorisation/ Duty Free

Import authorisation Schemes

21

Foreign Trade Policy-Advance Authorisation Scheme/Duty Free

Import Authorisation Scheme
Validity Period for Import
under Advance
Authorisation

Now validity period for import of advance authorisation shall be 12 months from the
date of issue of authorisation

Export Obligation Period

Normal export obligation period under advance authorization i.e. 18 months remains
the same.
However, export obligation period for export items falling in the category of defence,
military store, aerospace and nuclear energy shall be 24 months from the date of
issue of authorization

Exemption from BCD under

DFIA Scheme

Duty Free Import Authorisation shall be exempted only from Basic Customs Duty

22

V-Changes in Export Promotion Capital Goods

Schemes (EPCG)

23

Foreign Trade Policy-EPCG Scheme

Capital goods procured

from indigenous
manufacturer

Chartered Engineer
dispensed

Records to be maintained

In case capital goods are procured from indigenous manufacturers, which is currently
90% of the normal export obligation (6 times at the duty saved amount) has been
reduced to 75%, in order to promote domestic capital goods manufacturing industry.

Under EPCG scheme, obtaining and submitting a certificate from an independent

Chartered Engineer, confirming the use of spares, tools, refractory and catalysts
imported for final redemption of EPCG authorizations has been dispensed with.

At present, the EPCG Authorisation holders are required to maintain records for 3
years after redemption of Authorisations. Now the EPCG Authorization Holders shall
be required to maintain records for a period of 2 years only.

24

Foreign Trade Policy-EPCG Scheme

Anti-dumping duty not

exempted

In order to encourage manufacturing of capital goods in India, import under EPCG

Authorisation Scheme shall not be eligible for exemption from payment of antidumping duty, safeguard duty and transitional product specific safeguard duty.

25

VI-Changes in EOUs, EHTP & STPs

26

Foreign Trade Policy-Changes in EOUs, EHTPs and STPs

Sharing of Infrastructural
Facilities

Inter-unit transfer of Goods

& Services

Setting up warehouse near

port of Export

EOUs, EHTPs, STPs have been allowed to share infrastructural facilities among
themselves. This will enable units to utilize their infrastructural facilities in an optimum
way and avoid duplication of efforts and cost to create separate infrastructural
facilities in different units.

Inter unit transfer of goods and services have been allowed among EOUs, EHTPs,
STPs, and BTPs. This will facilitate group of those units which source inputs centrally
in order to obtain bulk discount. This will reduce cost of transportation, other logistic
costs and result in maintaining effective supply chain.

EOUs have been allowed facility to set up Warehouses near the port of export. This
will help in reducing lead time for delivery of goods and will also address the issue of
unpredictability of supply orders. .

27

Foreign Trade Policy-Changes in EOUs, EHTPs and STPs (Contd.)

Duty Free Goods for

training purposes

Extension of 1 year in case

of adverse situation

Supply of spares/
components

STP units, EHTP units, software EOUs have been allowed the facility to use all duty
free equipment/goods for training purposes.

At present, in a period of 5 years EOU units have to achieve Positive Net Foreign
Exchange Earning (NEE) cumulatively. Because of adverse market condition or any
ground of genuine hardship, then such period of 5 years for NFE completion can be
extended by one year

100% EOU units have been allowed facility of supply of spares/ components upto 2%
of the value of the manufactured articles to a buyer in domestic market for the purpose
of after sale services.

28

Foreign Trade Policy-Changes in EOUs, EHTPs and STPs (Contd.)

Validity of Letter of
Permission

Fast track clearance

CST Reimbursement

Letter of Permission (LOP) will have an initial validity of 2 yeas to enable the unit to
construct the plant and install the machinery. Further, extension can be granted by the
development commissioner upto one year.
Extension beyond 3 years of the validity of LOP can be granted in case unit has
completed 2/3rd of activities including the construction activities.

EOUs having physical export turnover of Rs. 10 crore and above, have been allowed
the facility of fast track clearances of import and domestic procurement.
Fast track clearance will be made on the basis of pre-authenticated procurement
certificate issued by customs/ central excise authorities
They will not have to seek procurement certificate for every import consignment

Now CST reimbursement will be allowed irrespective of fact that goods procured from
DTA, EOU & SEZ.
Earlier, the said benefit was available only in case when goods are procured from DTA

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VII-Other Key & Procedural Changes

30

Foreign Trade Policy-Other Key & Procedural Changes

Online Facility

Landing Documents

Online filing of application available with respect to various application filed under
chapter 3. However, certain documents like Certificates issued by Chartered
Accountants/ Company Secretary / Cost Accountant etc. have to be filed in physical
forms only.
In order to move further towards paperless processing of reward schemes, it has been
decided to develop an online procedure to upload digitally signed documents by
Chartered Accountant / Company Secretary / Cost Accountant.
In the new system, it will be possible to upload online documents like annexure
attached to ANF 3B, ANF 3C and ANF 3D, which are at present signed by these
signatories and submitted physically.

Landing documents of export consignment as proofs for notified market can be digitally
uploaded in the following manner:(i) Any exporter may upload the scanned copy of Bill of Entry under his digital
signature.
(ii) Status holders falling in the category of Three Star, Four Star or Five Star Export
House may upload scanned copies of documents.

31

Foreign Trade Policy-Other Key & Procedural Changes (Contd.)

Facility has been created to upload documents in Exporter/Importer Profile. There will
be no need to submit copies of permanent records/ documents (e.g. IEC,
Manufacturing licence, RCMC, PAN etc.) repeatedly with each application, once
uploaded.

Online filing of application for refund of TED is being 11 introduced for which a new
ANF has been created.

Certain information, like mobile number, e-mail address etc. has been added as
mandatory fields, in IEC data base. This information once provided by exporters,
would help in better communication with exporters. SMS/ email would be sent to
exporters to inform them about issuance of authorisations or status of their
applications

Exporter-Importer Profile

TED refunds

Communication with
Exporters/ Importers

32

Foreign Trade Policy-Other Key & Procedural Changes (Contd.)

Goods falling in the category of handloom products, books / periodicals, leather

footwear, toys and customized fashion garments, having FOB value up to Rs.25000
per consignment (finalized using e Commerce platform) shall be eligible for benefits
under FTP. Such goods can be exported in manual mode through Foreign Post Offices
at New Delhi, Mumbai and Chennai.

Only one IEC shall be issued against a single PAN. Multiple IECs against a single PAN
stands deactivated

One per thousand or part thereof subject to minimum of Rs. 500 and maximum of
Rupees one lakh on CIF value/ duty saved amount of authorisation/ permission.
Earlier, maximum of rupees fifty thousand on CIF value/ duty saved amount of
authorisation was permitted

E-Commerce Exports

One Pan One IEC

Application for Advance

Authorisation/DFIA/EPCG
scheme

33

VIII-Quality Complaints & Trade Disputes

34

Foreign Trade Policy-Quality Complaints & Trade Disputes

New Chapter introduced under FTP i.e. Chapter 8 which deals with Quality
Complaints and Trade Disputes. Earlier Chapter 8 deals with deemed export which is
now chapter 7.

Earlier there were no separate chapter or mechanism with regard to Quality

Complaints and Trade Disputes

Exporters need to project a good image of the country abroad to promote exports.
Maintaining an enduring relationship with foreign buyers is of utmost importance, and
complaints or trade disputes, whenever they arise, need to be settled amicably as
soon as possible. Importers too may have grievances as well.

In an endeavour to resolve such complaints or trade disputes and to create

confidence in the business environment of the country, a mechanism is being laid
down to address such complaints and disputes in an amicable way.

Complaints received from foreign buyers in respect of poor quality of the products
supplied by exporters from India;

Complaints of importers against foreign suppliers in respect of quality of the products

supplied; and

General

Objective

Disputes to be addressed

35

Foreign Trade Policy-Quality Complaints & Trade Disputes (Contd.)

Complaints of unethical commercial dealings categorized mainly as non-supply/

partial supply of goods after confirmation of order; supplying goods other than the ones
as agreed upon; non-payment; non adherence to delivery schedules, etc.

To deal effectively with the increasing number of complaints and disputes, a

Committee on Quality Complaints and Trade Disputes (CQCTD) will be constituted in
the 22 offices of the RAs of DGFT.

Following actions can be taken against importer/exporter as the case may be:

Disputes to be addressed

Quality complaints and

Trade Disputes Committee

Suspend or cancel Importer Exporter Code Number (IEC)

refuse to grant or renew a license, certificate, scrip or any other instrument
bestowing financial or fiscal benefit granted under the FTDRA
Action against Importer/
Exporter

suspend or cancel any License, certificate, scrip or any instrument bestowing

financial or fiscal benefit Act.
fiscal penalty in cases where a person makes or abets or attempts to make any
import or export in contravention of any provision of the Act, any Rules or Orders
made there under or the Foreign Trade Policy.

36

IX-Forthcoming e-Governance Initiatives

37

Foreign Trade Policy-Forthcoming e-Governance Initiatives

DGFT is currently working on the following EDI initiatives:

Message exchange for transmission of export reward scrips from DGFT to Customs.
Message exchange for transmission of Bills of Entry (import details) from Customs to DGFT.
Online issuance of Export Obligation Discharge Certificate (EODC).
Message exchange with Ministry of Corporate Affairs for CIN & DIN.
Message exchange with CBDT for PAN.
Facility to pay application fee using debit card / credit card.
Mobile applications for FTP

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Foreign Trade Policy, SEZ etc.)

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