Foreign Trade Policy 2004-09

Dr. R. Jayaraj,UPES

Objective:# Facilitate sustained growth in exports to attain a share of at least 1.5% of global merchandise trade. # Present share - 0.67% # Export target (2006-07)- 85 b $. # Present Annual growth rate(CAGR) -11.9%

New Export Target # Target- 1.5% of the International Trade

# CAGR Required- 15.18% (in US$ terms) # Assumption- World Trade Growth @ 4.5% (2003 rate)

 Objectives (Contd.) # Facilitating high share of Indian Goods

and Services in the International market # Act as Instrument of Economic Growth, Employment Generation and Poverty Alleviation # Reflect the priorities for development of the Indian Economy

STRATEGY TO ACHIEVE THE OBJECTIVES

# Bring down transaction cost Simplified procedure, Unshackling (removing chain control) of controls, built-in transparency & mutual trust; # India to be a Global hub for Manufacturing, Trading & Services; # Special Focus area Initiatives; # Facilitating Technological & Infra-structural upgradation; # Neutralising incidence of all levies & duties on inputs Duties & Levies should not be exported.


# # # # #

Thrust Sectors

# Agricultural
Handicrafts Handlooms Gems and Jewellery Leather Textile

Digital automation target All Export transactions would be through EDI (Electronic Data Interchange) mode by 31st October, 2005; Digital Signature and EFT (Electronic Fund Transfer) facility operational

Indias Foreign Trade Period $ Growth Rate

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 10.85 21.01 -1.65 20.34 17.26

Incorporating a legal entity In India [ROC] Trade License [State Departments] Permanent Account Number [PAN by Income Tax Dept.]

Proprietorship(owner) s& Partnership Concern

Bank Certificate [from the concerned Bank]

Importer-Exporter Code Number[DGFT Dir Gen of FT]

EXPORTS

IMPORTS Nature of Restriction ITC[HS] (Ind Trd clas Sys (Harm sys)) Classification

Free List

items

Negative List Restricted Canalized

Prohibited

ASIDE(Ass to States for Infra Devlop of Exp) SCHEME

INFRASTRUCTURE Related Sops

TOWNS OF EXPORT EXCELLENCE

Duty exemptions Under Customs Notif. 21/2002

Export Incentives(
Commerce) Preexport

Misc.Incentives Such as DFEC, Additional incentives Target Plus, Addl. Linked with Exports weightage DOC Department of CENTRAL DUTY REFUND/ NEUTRALISATION/ EXEMPTION SCHEMES Market Development Initiatives

Postexport

MDA Grant Market Development Assistance)

MAI Grant Market Access Initiative

 CENTRAL DUTIES CUSTOMS DUTYBasic, Addl(CVD Countervailing Duty (A duty placed on imported goods that are being subsidized by the importing government. This helps to even the playing field between the domestic producers and the foreign producers receiving subsidies.), E.Cess (local tax or rate), Anti-dumping, Safeguard duties etc. EXCISE DUTY--- Basic, Addl etc. EXPORT CESS (local tax or rate), CENTRAL SALES TAX INCOME TAX SERVICE TAX OTHERS ELECTRICITY DUTY, OCTROI tax when enter into particul town or city), SALES TAX etc.

SCHEMES
# SEZ Scheme (Special Economic Zone) # EOU (Export Oriented Units) /EHTP (Electronic Hardware Technology Parks)/STP (Software Technology Parks)/BTP (Bio-Technology Parks)Schemes # EPIP Scheme (Objective is to promote export oriented industries for growth of forex earning ) # Warehousing Scheme # CCP (Customs Clearance Permit) # DTA Schemes freely (subject to payment of applicable Customs Duty) (Domestic Tariff Area)

DTA (Domestic Tariff Area) SCHEMES

Post-Export Pre-Export 1. 2. 3. 4. 5. 6. DFRC, 2. DEPB, 3.REP DRAWBACKPhy & D.E. TED Refund Target Plus DFEC for Service Sec Vishesh Krishi Upaj Yojana

1. ADVANCE LIC. 2. EPCG

Physical (out of India/Supply to SEZ) (Against Indian Rupees or Free foreign Exchange) EXPORTS Supply within the country(Deemed)
(In Indian Rupees or Free Foreign ExchangeEEFC Exchange Earners Foreign Currency)
Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorized Dealer i.e. a bank dealing in foreign exchange. It is a facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.

Exporters:-- Physical Vs Merchant

ADVANCE LICENCE SCHEME

X---------- Y-------- Z

1. PHYSICAL EXPORT -- Duty free import of Inputs, Fuel, Oil, Energy, Catalyst etc. -- +V.A.;AU condition; Norm fixed & No
Norm cases; Imports & Exports valid upto 24 months; Further extn allowed -- Supply to SEZ units also covered; -- E.O. discharge based on S/Bs & BRC (Bank
Realisation Certificate )

(Irrevocable L/C , Provision of Avalisation, co-acceptance also available)

2. Advance Licence (Intermediate Supply) -- For supplies to Advance licence for physical exports; Alternatively direct Physical Exports
also allowed -- Duty free import of Inputs, Fuel, Oil,Energy,

Catalyst etc. -- +V.A.;AU (Actual user) condition; Norm fixed & No

Norm cases; Imports & Exports valid upto 24 months; Further extn allowed -- E.O. discharge based on S/Bs & Bank certificate (Irrevocable inland L/C , Provision of Avalisation, co-acceptance also available)

3. Advance Licence (Deemed Export) -- For supplies within India under various
projects, supplies to EOU(Export Oriented Unit)/EHTP (Electronic Hardware Technology Park)/STPSoftware Technology Park/BTP BIO-TECHNOLOGY PARKS -- Duty free import of Inputs, Fuel, Oil, Energy, Catalyst etc. -- +V.A.;AU condition; Norm fixed & No Norm cases; Imports & Exports valid upto 24 months or co-terminus with the project; Extn allowed -- E.O. discharge based on S/Bs & Bank certificate (Irrevocable inland L/C, Provision of Avalisation, co-acceptance also available) -- Anti-dumping & Safeguard duty not exempted except supplies to EOU/EHTP/STP/BTP

EPCG Scheme
--Import of capital goods with AU condition at
concessional rate of 5% duty for pre-production, Production & Post production purposes related to export (Both Physical & deemed);Import of Car -- E.O. 8 times the duty saved in 8 years; 12 Years; -- E.O. monitoring in two blocks only -- Special Dispensation for license with duty saved of Rs 100 crores or above, Agro units, SSI units, BIFR. E.O. period 12 years and varied /reduced E.O. -- EPCG Export Promotion Capital Goods license for project importReduced E.O. -- Export of alternate product/services allowed -- Special package for agro units in the AEZ

DFRC SCHEME
--Post export scheme based on S/B (Bill of Export) and BRC Bank Realisation Certificate; Both against Phy. & Deemed exports; --Min. 25% V.A., SION Standard Input Output Norms based, Certain sensitive items with technical specification allowed; --Freely transferable certificate; However DFRC with AU condition also available;24 months valid; -Fuel allowed to be transferred to marketing agencies authorised by Ministry of P&NG; --Facility of CENVAT Central Value-added Tax credit or drawback --Only basic customs duty exemption at the time of imports

(Cenvat is based on destination principle i.e. excise duty/service tax is paid only when goods are consumed. Till then, burden of duty gets passed on to the next buyer/customer [In case of sales tax, as per this principle, sales tax is payable in the State in which goods are consumed and not in the State in which goods are produced )

4.DEPB (DUTY ENTITLEMENT PASSBOOK )SCHEME

--Post export scheme based on S/B (Bill of Export) and BRC (Bank Realisation Certificate ); Freely transferable unless specified; -- Supplies to SEZ units also elligible --Based on basic customs duty on inputs --Filing of application and late cut --CENVAT credit or drawback available; --Any item including CG (freely importable) allowed for import; --Valid for 24 months;

TARGET PLUS SCHEME

--- For Star Export Houses;
-- Duty credit based on Incremental exports(fob (Free On
Board or Freight On Board. FOB specifies which party (buyer or seller) pays
for which shipment and loading costs, and/or where responsibility for the goods

value in free foreign exchange) subject to a minimum export turnover of Rs 10 crores in the previous year;-- Entitlement: 1. >20% & <25% 5% >=25% & <100% 10% >=100% 15%(Based on max. 100%growth) 2. Restrictions on export turnover calculation 3. Imports allowed -- CENVAT credit or DBK (Duty Drawback) allowed for the CVD Countervailing Duty paid/debited
is transferred. )

SERVICE EXPORTS
-- For 161 Tradable services
-- New Export Promotion Council for Services -- DFEC for Serve from India Scheme 1. Eligibility: -- Min.FFE of Rs 10 Lakhs in the preceding or current financial year (Exception Rs 5 Lakhs for individuals) -- Categories of exports excluded for entitlement 2. Entitlement: Hotels of one star & above 5% Stand alone Restaurants 20% All other service providers 10% 3. Imports allowed: -- With AU condition -- Any CAPITAL GOODS, Office Equipments, Furnitures and consumables etc -- No Agricultural Product except food items and beverages for the Hotels and Restaurants

VISHESH KRISHI UPAJ YOJANA --A new scheme christened as the Vishesh Krishi Upaj Yojana to
boost exports of specified agricultural products. 1. Duty credit entitlement of 5% of FOB value of Exports. 2. Exports of fruits, vegetables, flowers, minor forest produce and their value added variants 3. Freely transferable 4. Imports of inputs and capital goods permitted. 5.CENVAT credit or DBK allowed for the CVD

--Import of capital goods shall be permitted duty free under the

EPCG Scheme --Units in Agri Export Zones (AEZ) shall be exempt from BG under the EPCG Scheme -- Import of inputs such as pesticides shall be permitted under the Advance Licence for agro exports. --Capital goods imported under EPCG (exp prom on Cap Goods) permitted to be installed anywhere in the AEZ

THANKS