IMPORT OF CAPITAL MACHINERY

Publisher:
sidharthkapil@yahoo.com

SIIB
Introduction & History of Capital
Goods sector in India
Definition

Heavy equipment (such as excavators, forklifts, generators,
metal-forming or metal-working machines, vehicles) which
(in contrast to consumer goods) require a relatively large
investment, and are bought to be used over several years.

Also called producer goods.
What are capital goods ?

The economic term "capital goods" should not be confused
with the financial term "capital," which simply means
money.

An important distinction should also be made between
"capital goods" and "consumer goods," which are products
directly purchased by consumers for personal or household
use.
Take an example…

Cars are generally considered consumer goods because
they are usually bought by an individual for personal use.
Dump trucks, however, are usually considered capital
goods, because they are used by construction and
manufacturing companies to haul various materials.

Similarly, a chocolate candy bar is a consumer good but
the machines used to produce the chocolate candy bar
are considered capital goods.
Therefore

Capital goods, then, are products which are not produced
for immediate consumption; rather, they are objects that are
used to produce other goods and services.

These types of goods are important economic factors
because they are key to developing a positive return from
manufacturing other products and commodities.
THE INDIAN CAPITAL GOODS INDUSTRY

Planning process was initiated in 1951.

Influenced by the erstwhile Soviet Union model, which had
made impressive progress by rapid state-led industrialization.

PSUs were set up for promoting heavy industry.

Today India has a strong engineering and capital goods base.

The range of machinery produced in India includes:

heavy electrical machinery.

textile machinery

earthmoving and construction equipment .

oil & gas equipment.

food processing and packaging machinery,

railway equipment.

industrial refrigeration,

industrial furnaces, etc.
Over the years
• 1975 : Delicensing was initiated.
• 1985 : further delicensing of 25 broad groups of industries
including several items of industrial machinery.
• 1992-93 to 1996-97: GDP showed an upward trend because of
the expansionary phase in the post reform period.
– In 1994-95 customs duty declined from a high of 35% to 25% and
remained there till 1996-97.
– 1996-97. The decade of the 90’s was marked primarily by the
dismantling of the high tariff walls.
• 1996-97 to 2004-05 : Beginning of a recessionary phase.
– a Special Additional Duty (SAD) of 4% was levied in the 1998-99
Budget. The period 1999-00 to 2001-02 saw a drastic fall in
percentage change in the IIP of the capital goods sector. This fall
came down to a negative of –3.4%.
• 2002-03 onwards,
customs duty has been going down backed by higher IIP growth
in capital goods and GDP growth.
– A Special Additional Duty (SAD) of 4%, which was levied in the
1998-99 Budget, was subsequently removed in the 2003-04 Budget.
Current status
• The capital goods industry’s annual production stood at
Rs.500 billion in 2003-04.
• Its contribution to the exchequer in terms of customs, excise
and sales tax are estimated to be in excess of Rs.150 billion.
• From CMIE data it is noticed that though there was a 15%
increase in the market size in 2003-04, the production
growth of 2003-04 over 2002-03 was only negligible at
2.7%.
• Consequently there was a 55% jump in imports. The imports
in the capital goods sector are gradually going down
Import of capital machinery –
Trends & HS Classifications
THE INDIAN CAPITAL GOODS INDUSTRY

• The development of a strong and vibrant engineering and

capital goods sector has been at the core of the industrial
strategy in India since the planning process was initiated in
1951. The emphasis that this sector received was primarily
influenced by the erstwhile Soviet Union model, which had
made impressive progress by rapid state-led industrialization
through the development of the core engineering and capital
goods sector.
The ‘Mahalanobis Model’

‘Supply oriented’ model with a basic emphasis on increasing the

rate of capital accumulation and saving, gave the engineering
and capital goods sector a central place.
Policy environment

Delicensing was initiated in 1975. Among the industries de-
licensed were industrial machinery, machine tools and other
equipment.

Broad banding of the machine tools industry in 1983 followed
this.

The year 1985 saw a further delicensing of 25 broad groups of
industries including several items of industrial machinery for non -
MRTP, non-FERA companies.

The industrial machinery sector was also broad-banded covering
chemicals, pharmaceuticals, petrochemicals and fertilizer
machinery subsequently.

In August 1987, a Technology Upgradation Fund was launched for
five product groups in the capital goods sector
Trends
H.S. code of capital machinery
 Foreign Trade Policy 2004-09 highlights

In case of movable capital goods in the service sector, the requirement of installation
certificate from Central Excise has been done away with.

EOUs: Import of capital goods shall be on self-certification basis for EOUs.

Import of Second hand Capital Goods

a. Import of second-hand capital goods shall be permitted without any age
restrictions.

b. Minimum depreciated value for plant and machinery to be re-located into India
has been reduced from Rs.50 crores to Rs.25 crores.
H.S. code of capital machinery(contd.)
H.S. code of capital machinery(contd.)
H.S. code of capital machinery(contd.)
H.S. code of capital machinery(contd.)
How to get the data ?
Statistical Analysis of Capital
Goods
Based on data from Trade Stat
HS CODE 82

TOOLS, SPOONS & FORKS OF BASE METAL

Range 8201 - 8203

Hand tools & machine tools used in agriculture,

Handsaws & metal pts,

Saw blades, hand tools, blow torches,

Interchange tools for hand- or machine-tools

India imports low quality machine tools primarily from Asia

India has a large export of such goods (2,140 crores in 2007-
08)
 All figures in Rs. Lacs
HS CODE 82 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

82 Asia 79,231.59 93,250.74 1,12,892.23
82 Europe 68,541.57 73,095.68 69,948.71
82 N. America 14,486.72 22,511.64 14,250.55
82 L. America 467.80 548.10 734.85
82 Africa 754.88 637.53 456.73
82 CIS & Baltic 109.73 618.03 98.73

HS Code Country 2006-2007 2007-2008 2008-2009*

82 S. Korea 23,358.67 10,339.14 38,849.96
82 Germany 28,558.23 34,746.32 29,859.94
82 Japan 17,901.31 32,157.22 28,462.79
82 CHINA 14,300.73 19,285.71 27,885.98
82 USA 14,048.53 21,911.62 13,641.79
HS CODE 83

MISCELLANEOUS ARTICLES OF BASE METAL

Range: 8301-8311

Padlocks, Hardware, fixtures

Office and desk equip & parts of base metal
 All figures in Rs. Lacs
HS CODE 83 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

83 Asia 51,815.10 63,070.68 69,870.40
83 Europe 27,964.77 35,494.91 32,903.90
83 N. America 6,688.96 5,747.92 5,682.66
83 L. America 914.77 1,048.64 730.29
83 Africa 102.25 103.80 131.66
83 CIS & Baltic 19.30 15.54 4.14

HS Code Country 2006-2007 2007-2008 2008-2009*

83 CHINA 21,079.01 27,382.09 32,416.05
83 Germany 9,804.37 13,052.99 12,376.19
83 S. Korea 8,877.97 10,574.64 12,092.49
83 Hong Kong 5,138.47 6,516.07 6,607.15
83 USA 6,469.56 5,485.88 5,575.72
 HS CODE 84

NUCLEAR REACTORS, BOILERS, MACHINERY & MECHANICAL
APPLIANCES, COMPUTERS

Range 401-85

Power

Heavy demand for energy equipment especially high quality equipment from
China and Germany.

Major domestic players are BHEL, L&T, NTPC, Suzlon etc.

Nuclear reactors, Boilers, Steam turbines & other vapour turbines, internal comb
piston engines

Hydraulic turbines, water wheels & regulators, turbojets, turbo propellers &
other gas turbines, pts

Industrial

Cheap imports from China is preferred over Indian goods

Furnace burners, mechanical stokers etc, parts

Calendaring machines etc & cylinders, parts

Centrifuges, filter etc mach for liquid or gases, pts

Weighing machines & weighing machine weights, pts
HS CODE 84

Movement

Some equipment is imported owing to the highly specialized and capital
intensive nature of goods

Major domestic players include BEML

Derricks, cranes, mobile lifting frames etc

Fork-lift trucks, other works trucks with lifts etc.

Lifting, handling, loading & unload machines

Self-propelled bulldozers, graders, scrapers etc

Ancillary Industry

Low domestic production leading to high imports

Domestic player is Lakshmi Machine works

Printing machinery, machines ancillary to printing

Weaving machines (looms)

Machinery for work leather etc & footwear etc, pts

Metal-rolling mills

Machines for assembling elec tubes etc & glass mfr
 HS CODE 84

Agricultural

Decreasing Imports as a result of strong domestic production

Major player here is HMT Limited and Mahindra & Mahindra Limited

Harvest machines

Milking machines & dairy machinery & parts

Machine tools

Imports mainly to satisfy high tech demand of machine tools

Major domestic player is HMT

Machine tools for material removal by laser etc

Machining centres, unit const mach etc work metal

Lathes for removing metal

Office machines

Mostly imported from China and Taiwan

Automatic data process machines, computer hardware
 All figures in Rs. Lacs
HS CODE 84 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

84 Asia 40,49,866.40 49,57,530.87 45,26,758.32
84 Europe 33,05,754.69 40,01,110.08 35,15,928.47
84 N. America 9,08,638.82 10,09,795.60 8,57,520.74
84 L. America 78,201.57 93,470.80 75,064.26
84 CIS & Baltic 43,493.08 66,108.56 34,690.73
84 Africa 19,097.25 22,377.48 16,150.91

HS Code Country 2006-2007 2007-2008 2008-2009*

84 CHINA 14,70,446.00 19,41,372.66 18,75,118.82
84 Germany 13,94,084.71 14,60,083.61 13,58,293.90
84 Japan 6,73,338.47 8,77,513.88 9,93,051.54
84 USA 8,57,143.58 9,59,602.73 8,13,543.40
84 Italy 5,10,524.34 7,88,939.29 6,60,811.10
HS CODE 85

ELECTRICAL MACHINERY & EQUIP. & PARTS,
TELECOMMUNICATIONS EQUIP., SOUND
RECORDERS, TELEVISION RECORDERS

Range: 8501 – 48

Heavily imported from China and Korea

Electric motors and generators (no sets)

Electromechanical tools, working in hand, parts

Industrial or lab electric furnaces etc, parts

Electric water, space & soil heaters, hair etc dry, pt

Radar apparatus, radio navigational aid & remote cont app

Electric signal, safety or traffic control equip
 All figures in Rs. Lacs
HS CODE 85 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

85 Asia 42,11,213.99 52,67,597.62 54,23,629.72
85 Europe 16,74,506.82 20,68,014.46 17,76,398.52
85 N. America 6,24,011.48 6,54,216.21 5,08,865.71
85 L. America 35,373.53 46,110.94 36,134.10
85 CIS & Baltic 6,545.63 12,871.85 21,744.06
85 Africa 15,669.46 12,479.67 11,261.77

HS Code Country 2006-2007 2007-2008 2008-2009*

85 CHINA 19,19,132.37 30,69,771.07 30,82,848.89
85 S. Korea 5,23,765.35 3,79,241.89 5,65,191.77
85 Germany 4,52,266.70 5,70,182.69 5,18,698.26
85 USA 5,82,436.52 5,99,269.53 4,75,533.59
85 Singapore 4,32,662.38 3,75,360.20 3,66,386.18
HS CODE 86

RAILWAY OR TRAMWAY LOCOMOTIVES, ROLLING
STOCK, TRACK FIXTURES & FITTINGS, SIGNALS

Range: 8601- 09

Domestic production meets most requirements

However specialized coached like Metro coaches are
imported mainly from Korea and China

Rail locomotives

Tramway maintenance or service vehicles

Containers for one or more modes of transport
 All figures in Rs. Lacs
HS CODE 86 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

86 Asia 17,255.00 29,627.86 50,982.54
86 Europe 31,678.82 21,746.21 21,401.22
86 N. America 7,484.14 4,208.87 9,841.23
86 L. America 91.48 6,283.71 3,691.12
86 CIS & Baltic 3,784.67 5,430.77 2,456.44
86 Africa 48.48 143.99 60.29

HS Code Country 2006-2007 2007-2008 2008-2009*

86 CHINA 7,415.94 24,293.94 35,932.61
86 USA 7,447.05 3,808.94 9,336.85
86 Germany 4,705.30 4,099.35 7,488.25
86 Japan 2,819.33 144.35 7,089.26
86 S. Korea 3,583.06 915.06 5,972.44
HS CODE 87

VEHICLES OTHER THAN RAILWAY OR TRAMWAY
ROLLING STOCK

Range 8701-16

Poor technology of domestically produced commercial
vehicles leads to imports

Commercial vehicles imported mainly from Korea

Tractors & Trailers

Public-transport type passenger motor vehicles

Motor vehicles for transport of goods

Works trucks, self-prop, no lift, stat tractors

Tank & other armoured fight vehicle, motorized, and parts
 All figures in Rs. Lacs
HS CODE 87 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

87 Asia 3,70,425.50 5,85,262.06 6,72,657.08
87 Europe 2,20,211.17 3,13,418.90 3,71,412.54
87 N. America 16,086.37 23,765.15 26,131.53
87 L. America 4,586.45 11,058.96 22,456.50
87 Africa 455.19 931.32 1,232.01
87 CIS & Baltic 1,234.20 1,994.13 825.74

HS Code Country 2006-2007 2007-2008 2008-2009*

87 S. Korea 1,42,345.87 2,35,429.68 2,64,116.47
87 Japan 81,579.93 1,66,041.60 1,88,779.71
87 CHINA 96,770.53 1,28,517.52 1,56,602.27
87 Germany 71,580.63 1,29,843.34 1,31,028.23
87 Italy 15,821.00 21,143.19 48,998.39
HS CODE 88

AIRCRAFT, SPACECRAFT, & PARTS THEREOF

Range: 8801 – 05

Highly technology oriented industry mostly import oriented

Aircraft, powered, spacecraft & launch vehicles

Aircraft launch gear, deck-arrest
 All figures in Rs. Lacs
HS CODE 88 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

88 N. America 10,09,430.43 33,47,561.93 1,54,002.92
88 Asia 1,54,321.23 1,14,997.41 1,08,980.53
88 Europe 11,65,386.59 17,65,344.30 97,076.32
88 CIS & Baltic 40,032.91 16,343.48 9,511.96
88 Africa 223.69 452.76 738.95
88 L. America 10,332.48 12.58 99.89

HS Code Country 2006-2007 2007-2008 2008-2009*

88 USA 8,84,445.97 33,08,348.52 1,18,385.39
88 Singapore 52,363.04 50,502.10 53,870.40
88 France 10,10,225.55 15,40,823.07 46,458.02
88 UK 34,146.98 40,285.37 18,755.38
88 Germany 59,962.38 1,55,001.51 15,481.57
HS CODE 89

SHIPS, BOATS, & FLOATING STRUCTURES

Range: 8901-08

Domestic production capacity is limited

Fishing vessels, factory ships & ships, vessels

Tugs and pusher craft

Fire-floats etc, fl docks & platforms

Floating structures, rafts, tanks, buoys etc
 All figures in Rs. Lacs
HS CODE 89 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

89 Asia 3,55,400.32 6,68,467.54 5,59,464.86
89 Europe 6,09,193.74 7,00,431.27 5,37,786.67
89 N. America 59,537.63 1,55,243.29 82,906.01
89 CIS & Baltic 6,955.78 1,252.60 51,885.94
89 L. America 1,59,779.59 1,77,060.16 18,464.34
89 Africa 17,286.53 16,772.27 132.77

HS Code Country 2006-2007 2007-2008 2008-2009*

89 Singapore 88,398.97 2,82,675.27 2,88,555.30
89 France 66,551.18 32,812.37 92,996.90
89 USA 59,537.63 1,47,897.18 82,906.01
89 UK 21,781.65 47,319.70 82,212.86
89 CHINA 44,876.58 1,36,890.83 63,072.43
 HS CODE 90

OPTICAL, PHOTOGRAPHIC, CINEMATOGRAPHIC,
MEASURING, CHECKING, PRECISION, MEDICAL OR
SURGICAL INSTRUMENTS & ACCESSORIES

Range: 9001 – 33

Poor local technology leads to imports

Optical instruments from Germany, Medical & Control instruments from
USA

Optical fibres & bundles etc

Cinematographic cameras & projectors, parts etc

Image projectors, still, enlargers etc, still, pts

Compound optical microscopes, parts & accessories

Medical, surgical, dental or vet instruments

Machines etc for testing mechanical prop. of material

Automatic regulating or control instruments, parts
 All figures in Rs. Lacs
HS CODE 90 * Indicates figures till December 2009

HS Code Region 2006-07 2007-08 2008-09*

90 Europe 5,79,984.23 7,01,375.87 6,70,261.91
90 Asia 4,51,128.24 5,56,970.31 5,06,578.63
90 N. America 3,54,745.82 4,12,802.82 3,36,737.15
90 CIS & Baltic 3,557.60 11,217.74 11,555.27
90 L. America 8,671.24 13,064.51 9,589.26
90 Africa 1,722.25 1,567.55 1,720.31

HS Code Country 2006-2007 2007-2008 2008-2009*

90 USA 3,42,031.49 3,94,055.41 3,21,482.49
90 Germany 2,25,289.98 2,77,654.97 2,60,741.63
90 Japan 1,31,195.04 1,39,042.25 1,39,976.47
90 CHINA 91,833.04 1,32,481.07 1,10,008.14
90 Singapore 82,996.70 1,07,417.30 92,545.71
Problems in Domestic Capital
Goods sector
Why are Capital Goods imports high??
Why are Indian Capital Goods manufacturers not thriving??
Import Competitiveness

Imports have been gaining at the expense of domestic producers
in the Indian market
 Export Competitiveness

India has a negative competitive affect while Chinese and Korean
exports are becoming more competitive
Business Environment Issues
Labor
• Labour in the Indian Capital Goods sector is highly cost
competitive.
• The labour cost efficiency for Indian Capital Goods sector is 1.32
times that of China’s and 1.38 times that of Taiwan’s
• Inflexible labor policy and low productivity erodes this advantage
Raw Material
• The raw material price indices have risen faster than the
machinery price index
• Few Manufacturers use value engineering techniques
• The quality of raw materials not up to the international standards
in terms of dimensional tolerances and metallurgical properties
Business Environment Issues
Working Capital Requirements
• Indian Capital Goods manufacturers have working capital
requirements as high as 45 % of net sales (against global levels of
15 %).
• High interest rate regime in India
• Increasingly difficult for the Indian Capital Goods sector to
source capital
• Bank credit to capital goods sector declining

Technological competitiveness
• Poor industry–institute interactions
• Human resources devoted to design and engineering activity is
about 20 - 50 % less than in other industrialized countries
Business Environment Issues
Negative perceptions of "Made in India" image
• Results in price concessions by Indian manufacturers to offset product bias in export
markets
• Poor domestic brand consciousness
Quality of infrastructure
• Affecting competitive delivery schedules and increasing operating costs.
• The delivery time of locally made Capital Goods is 1.5 times longer than in
industrialized nations.
• Reliability of power is poor forcing firms to set up captive power plants
• Overall the infrastructure inadequacies are estimated to translate into 5 % cost
disadvantage for Indian Capital Goods manufacturers vis-à-vis foreign manufacturers.
Other Problems
• Lack of sub-contracting arrangements to SME
• Low incentive to innovate as domestic consumers are not quality conscious.
Government level Issues
High incidence of indirect taxation
• Along with the high cost of finance and infrastructure inadequacies, the domestic
Capital Goods producers suffer from an overall cost disadvantage up to 34 %
against the imports.
Duty structure
• Inversion of duty structure - higher import duty on select raw materials like
copper, rubber components etc. compared to that of finished Capital goods import
Zero duty or Concessional Duty on Project imports
• Zero-duty imports for projects like refinery, fertilizer etc. puts the domestic
Capital Goods industry at a disadvantage.
• PSUs get preference over private players
Second-hand machinery imports
• Enables end user industries to set up projects at lower costs
• Capital Goods industry at a disadvantage losing its competitiveness to imports.
Firm level Issues
Delay in privatization
• Indian Capital Goods Industry dominated by Public Sector Enterprises (PSEs) in
heavy engineering, machine tools, boiler manufacturing
• While private firms prevail in industrial machinery segments such as cement,
sugar and most other non-electrical machinery.
Large width of capital goods
• Legacy of import-substitution policy
• Lack of specialization in segments
Others
• Poor marketing strategy
• Lack of customer perception
• Lack of quality focus
• Low spends on R&D and innovation
• Lack of focus on downstream activities
Export Promotion of Capital Goods
(EPCG)
 EPCG SCHEME

The scheme allows import of capital goods for pre production, production and
post production at 5% Customs duty subject to an export obligation equivalent to
8 times of duty saved on capital goods imported under EPCG scheme to be
fulfilled over a period of 8 years reckoned from the date of issuance of licence.

Capital goods would be allowed at 0% duty for exports of agricultural products
and their value added variants.

However, in respect of EPCG licences with a duty saved of Rs.100 crore or more,
the same export obligation shall be required to be fulfilled over a period of 12
years.

The capital goods shall include spares (including refurbished/ reconditioned
spares) , tools, jigs, fixtures, dies and moulds. EPCG licence may also be issued for
import of components of such capital goods required for assembly or manufacturer
of capital goods by the licence holder.
 EPCG SCHEME

Second hand capital goods without any restriction on age may also be imported
under the EPCG scheme.

Spares (including refurbished/ reconditioned spares), tools, refractories, catalyst and
consumable for the existing and new plant and machinery may also be imported
under the EPCG scheme.

However, import of motor cars, sports utility vehicles/ all purpose vehicles shall be
allowed only to hotels, travel agents, tour operators or tour transport operators
whose total foreign exchange earning in current and preceding three licencing years
is Rs 1.5 crores. However, the parts of motor cars, sports utility vehicles/ all
purpose vehicles such as chassis etc cannot be imported under the EPCG Scheme.
EPCG - PROJECTS

An EPCG license can also be issued for import of capital goods for supply to projects
notified by the Central Board of Excise and Customs under S.No 441 of Customs
Exemption Notification No 21/2002 dated 01.03.2002 wherein the basic customs duty
on imports is 10% with a CVD of 16%.

The export obligation for such EPCG licenses would be eight times the duty saved. The
duty saved would be the difference between the effective duty under the aforesaid
Customs Notification and the concessional duty under the EPCG Scheme.
Indigenous Sourcing of Capital Goods

A person holding an EPCG licence may source the capital goods from a domestic
manufacturer instead of importing them. The domestic manufacturer supplying capital goods
to EPCG licence holders shall be eligible for deemed export benefit under paragraph 8.3 of
the Policy.

EPCG for agro units

In the case of EPCG licences issued to agro units in the agri export zones, a period of 12 years
reckoned from the date of issue of the licence would be permitted for the fulfilment of export
obligation.

An LUT/ Bond in lieu of BG may be given for EPCG licence granted to units in the Agri
Export Zones provided the EPCG licence is taken for export of the primary agricultural
product (s) notified in Appendix 15 or their value added variants.
Application…

Application for license is to be made to DGFT’s office along with supporting
docs such as P.O. etc

DGFT’s office checks the goods to be imported – value and also goods to be
exported – value.

Import validity of license is of 2 years.

Proof of exports obligation is to be submitted in the form of shipping bill , bank
certificates.

In case export obligation is partly fulfilled , DGFT office charges penalty in
proportion to the duty unfulfilled amount and also charges 15% interest
annually from the date of import of m/c in to the country.
Other Policies regarding Capital
Goods
EXIM Policy

Central Government hereby notifies the Foreign Trade Policy
for the period 2004-2009 incorporating the Export and
Import Policy for the period 2002-2007, as modified. This
Policy shall come into force with effect from 1st September,
2004 and shall remain in force up to 31st March, 2009,
unless as otherwise specified.
Compliance with Laws

All imported goods shall also be subject to domestic Laws, Rules, Orders,
Regulations, technical specifications, environmental and safety norms as
applicable to domestically produced goods.

Restricted Goods

Any goods, the export or import of which is restricted under ITC(HS)

may be imported only in accordance with a license/ certificate/
permission or a public notice issued in this behalf.

Duty Exemption and Remission Schemes

Duty exemption schemes enable duty free import of inputs required for
export production. An Advance License is issued as a duty exemption
scheme. A Duty Remission Scheme enables post export replenishment/
remission of duty on inputs used in the export product.
Advance License
An Advance License is issued to allow duty free import of
inputs, which are physically incorporated in the export
product (making normal allowance for wastage). In
addition, fuel, oil, energy, catalysts etc. which are consumed
in the course of their use to obtain the export product, may
also be allowed under the scheme.
Advance License

Advance License can be issued for:-

1. Physical exports
2. Intermediate supplies
3. Deemed exports
 RULES IN SPECIAL ZONES

Special rules are applicable in Export Oriented Units (EOUS),
Electronics Hardware Technology Parks (EHTPS), Software Technology
Parks (STPS) And Bio-technology Parks (BTPS)

Export of Special Chemicals, Organisms, Materials, Equipment and
Technologies shall be subject to fulfillment of the conditions indicated in
the ITC (HS).

They 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.
Special Economic Zone

• SEZ unit may import/procure from the DTA without payment of duty all types of
goods and services, including capital goods, whether new or second hand
• Goods shall include raw material for making capital goods for use within the unit.

Leasing of Capital Goods

• SEZ unit may, on the basis of a firm contract between the parties, source the capital
goods from a domestic/foreign leasing company.
• In such a case the SEZ unit and the domestic/ foreign leasing company shall jointly file
the documents to enable import/ procurement of the capital goods without payment
of duty.
THANK YOU