Exim po...(1)

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EXPORT-IMPORT POLICYPRESENTED BY:SANOBER SHIVANI SUNITAVANDANA1

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INTRODUCTIONThroughout knowledge &understanding of the regulatory environment Critical appreciation of a country’s trade policy & regulatory frameworkIt facilitates decisions that are crucial to the development of a successful strategy.2

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Thus EXIM policyinfluences the following major decisions:Selection of productMarket selectionProduct modification for customization for target marketInternational pricing decisionsInternational market promotion decisionInternational marketing strategy decisions3

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EXIM POLICY OFINDIAIndia EXIM Policy - Foreign Trade Policy.

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Set of guidanceand instruction established by the DGFT in matters related to the import and export of goods in India.

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Formulated under theImport & Export(control) Act, 1947

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Now its knownas Foreign Trade(Development & Regulation) Act, 1992

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Headed by DirectorGeneral of Foreign Trade4

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OBJECTIVES OF EXIMTo establish the framework for globalisation.To promote the productivity competitiveness of Indian industry.To encourage the attainment of high & internationally accepted standards of quality.To augment export by facilitating access to raw materials, intermediate components, consumables and capital goods from the international market.To generate new employment.To provide quality consumer products at reasonable prices. 5

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VOLUMES OF EXIMEXIMpolicy is established in 5 volumes:Export-import policy: provisions & schemes related to exports & imports.Handbook of procedures(vol 1): export-import procedures to be followed by parties like exporter, importer, licenser etc.Handbook of procedures(vol 2): input-output norms used for working out the proportion of various inputs used/required in the manufacturing of the resultant products so as to determine the advance license entitlement & DEPB (Duty Exemption Pass Scheme) rates.6

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4) ITC (HS)Classification of Export & Import Items: it serves as a comprehensive references manual for finding out exportability or importability of products with references to the current exim policy.5) Schedule of DEPB Rates (Vol 5): it provides a complete rate structure of DEPB(Duty Exemption Passbook Scheme). 7

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EXPORT PROMOTION SCHEMES& INCENTIVESDUTY DRAWBACK: sec 74 & 75 of Customs Act

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Defined asthe rebate of duty chargeable on any imported or excisable material used in the manufacture of goods exported from India.

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EXPORT PROMOTIONCAPITAL GOODS(EPCG)

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Introduced in1990

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Enable the importof capital goods at concessional rate of duty subject to an appropriate export obligation accepted by the exporter. 8

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SCHEMES & INCENTIVESDUTYEXEMPTION SCHEMES

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Enable duty-free import of inputs required for export production.

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Consumables like fuel,oil, energy, catalysts, etc. too are included

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DUTY REMISSIONSCHEMES

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DEPB-introduced in1997; grant of credit on post export basis as specified percentage of freight on board value of export made in freely convertible currency

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Duty free replenishmentcertificate(DFRC)-introduced on 1 April 2000; to provide the benefits of advance license on post-export basis. 9

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SCHEMES & INCENTIVESASSISTANCETO STATES FOR INFRASTRUCTURE DEVELOPMENT FOR EXPORTS & OTHER ALLIED ACTIVITIES(ASIDE)

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The schemesprovide an outlay for the development of export infrastructure, which is distributed among the states according to pre-defined criteria.

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i.e the schemesproposes to provide funds to state govts/union territories for export promotion

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20% of fundsremain with central govt. & 80% of the funds will be given to state govts/ union territories.10

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SCHEMES & INCENTIVESEXPORTPROMOTION INDUSTRIAL PARK (EPIP) SCHEME

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EPIP introduced inaugust 1995 & merged with ASIDE from 1 April 2002.

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Govt through thisscheme provides financial support to create infrastructure for export production.

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EX: Sitapur (Rajasthan);Bangalore; Chengalpattu(TM); Kundli(Haryana); Medak(AP); Kakkanad(Kerala);etc.

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CRITICAL INFRASTRUCTURE BALANCE(CIB)SCHEME

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Introduced in1996-1997

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To balance capitalinvestments for removing bottlenecks from the path of development of infrastructure for export production & easy transport. 11

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INDIA’S FOREIGN TRADEPOLICY 2009-14The Union Commerce Ministry, Government of India announces the integrated FTP in every five year. This is also called EXIM policy. This policy is updated every year with some modifications and new schemes. New schemes come into effect on the first day of financial year i.e. April 1, every year. The Foreign trade Policy which was announced on August 28, 2009 is an integrated policy for the period 2009-14.12

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INDIA’S FOREIGN TRADEPOLICY 2009-141. To arrest and reverse declining trend of exports which will be reviewed after every two years. 2. To Double India's exports of goods and services by 2014. 3. To double India's share in global merchandise trade by 2020 (long term aim). India's share in Global merchandise exports was 1.45% in 2008.Objectives13

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INDIA’S FOREIGN TRADEPOLICY 2009-144. Simplification of the application procedure for availing various benefits. 5. To set in motion the strategies and policy measures which catalyze the growth of exports. 6. To encourage exports through a "mix of measures including fiscal incentives, institutional changes, procedural rationalization and efforts for enhance market access across the world and diversification of export markets. 14

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INDIA’S FOREIGN TRADEPOLICY 2009-14Aims at developing export potential, improving exportperformance, boosting foreign trade and earning valuable foreign exchange(as India's exports have been battered by the global recession). A fall in exports has led to the closure of several small- and medium-scale export-oriented units, resulting in large-scale unemployment.Aim in General15

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INDIA’S FOREIGN TRADEPOLICY 2009-14Export Target : $ 200 Billion for 2010-11 Export Growth Target: 15 % for next two year and 25 % thereafter.Targets:16

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INDIA’S FOREIGN TRADEPOLICY 2009-14Re-fixation of Annual Average Export Obligation: Taking into account the decline in exports, the facility of Re-fixation of Annual Average Export Obligation for a particular financial year in which there is decline in exports from the country, has been extended for the 5 year Policy period 2009-14. Support for Green products and products from North East extended.EPCG Scheme:1. Obligation under EPCG(Export Promotion Capital Goods) scheme relaxed. 2. To aid technological up gradation of export sector, EPCG Scheme at Zero Duty has been introduced. 3. Export obligation on import of spares, moulds etc. under EPCG Scheme has been reduced by 50%. 17

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INDIA’S FOREIGN TRADEPOLICY 2009-141. 26 new markets added under Focus Market Scheme(FMS); 16 in Latin America & 10 in Asia-Oceania).2. Incentives under FMS raised from 2.5 % to 3 % 3. Incentive available under Focus Product Scheme (FPS) raised from 1.25% to 2%. 4.Extra products included in the scope of benefits under FPSHigher support for market & product diversification18

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INDIA’S FOREIGN TRADEPOLICY 2009-145. Focus Product Scheme benefit extended for export of ‘green products 'and some products from the North East. 6. A common simplified application form has been introduced to apply for the benefits under FPS, FMS, MLFPS and VKGUY. 19

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INDIA’S FOREIGN TRADEPOLICY 2009-14Announcements for MDA & MAI:Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) has been announced.Towns of Export Excellence (TEE)The following cities have been recognized as towns of export excellence (TEE)Handicrafts : Jaipur, Srinagar and AnantnagLeather Products : Kanpur,Dewas and AmburHorticultural Products: Malihabad20

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INDIA’S FOREIGN TRADEPOLICY 2009-14Scheme for Status Holders (Status Holders means star status holders)1. Additional Duty Credit Scrip's shall be given to Status Holders @ 1% of the FOB value of past exports accelerate exports and encourage technological up gradation. 2. This facility shall be available for sectors of leather (excluding finished leather), textiles and jute, handicrafts, engineering (excluding Iron & steel & non-ferrous metals in primary and intermediate form, automobiles & two wheelers, nuclear reactors & parts, and ships, boats and floating structures), plastics and basic chemicals (excluding pharma products). 21

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INDIA’S FOREIGN TRADEPOLICY 2009-143. This facility shall be available up to 31 March, 2011. 4. Transferability for the Duty Credit scrip's being issued to status holders under VKGUY Scheme permitted only for the procurement of cold chain equipments.22

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INDIA’S FOREIGN TRADEPOLICY 2009-14Extension of Income Tax Exemption to EOU and STPI :Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of Income Tax Act, has been already extended for the financial year 2010-11 in the Budget 2009-10.Extension of ECGC :The adjustment assistance scheme initiated in December, 2008 to provide enhanced ECGC cover at 95%, to the adversely affected sectors, is continued till March, 2010.23

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INDIA’S FOREIGN TRADEPOLICY 2009-14Fisheries exempted from maintenance of average EO under EPCG Scheme (along with 7 sectors) however Fishing Trawlers, boats, ships and other similar items shall not be allowed for this exemption. Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate of Entitlement (DFCE) Scheme for the marine sector. Announcements For Marine sector :24

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INDIA’S FOREIGN TRADEPOLICY 2009-14Duty Drawback is allowed on Gold Jewellery. Plan to establish "Diamond Bourse (s) with an aim to make India and International Trading Hub . Introduction of a new facility to allow import on consignment basis of cut & polished diamonds for the purpose of grading/ certification. Announcements for Gems & Jewellery Sector:25

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INDIA’S FOREIGN TRADEPOLICY 2009-14Introduction of a single window system to facilitate export of perishable agricultural product with an aim to reduce transaction and handling cost. This system will involve creation of multi-functional nodal agencies. These agencies will be accredited by APEDA. Announcements for Agro Exports:26

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INDIA’S FOREIGN TRADEPOLICY 2009-14On the payment of 50 % applicable export duty, Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi finished leather frompublic bonded ware houses.Announcements for Leather Exports 27

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INDIA’S FOREIGN TRADEPOLICY 2009-14The existing Minimum value addition under advance authorization scheme for export of tea is 100 %. It has been reduced from the existing 100% to 50%.DTA (Domestic Tariff Area) sale limit of instant tea by EOU(Export oriented units) increased from 30% to 50%. Export of tea has been included under VKGUY(VisheshKrishi & Gram UdyogYojana)) Scheme benefits. Announcements for Tea Exports:28

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INDIA’S FOREIGN TRADEPOLICY 2009-14Export Obligation Period for advance authorizations increased from existing 6 months to 36 months. Pharma sector included under MLFPS for countries in Africa and Latin America & some countries in Oceania and Far East. Announcements for Pharma Exports 29

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INDIA’S FOREIGN TRADEPOLICY 2009-14The claims under Focus Product Scheme, the requirement of " Handloom mark" was required earlier. This has been removed.Announcements for Handloom Exports30

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INDIA’S FOREIGN TRADEPOLICY 2009-14Scheme for Export Oriented Units:EOUs have been allowed to sell products manufactured by them in DTA (Domestic Tariff Area) up to a limit of 90% instead of existing 75%, without changing the criteria of ‘similar goods’, within the overall entitlement of 50% for DTA sale. (This means that instead of 75% these units can sell up to 90 % of their products in the domestic markets) EOU allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards. 31

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INDIA’S FOREIGN TRADEPOLICY 2009-14Announcements for Value Added Manufacturing (VAM) To encourage Value Added Manufactured export, a minimum 15% value addition on imported inputs under Advance Authorization Scheme. Announcements for Project Exports: Project Exports and a large number of manufactured goods covered under FPS and MLFPS. 32

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INDIA’S FOREIGN TRADEPOLICY 2009-14Easy Import of samples: Number of sample pieces has been increased from the existing 15 to 50. This will facilitate the duty free import of samples by exporters. Convertibility of Shipping Bills Greater flexibility has been permitted to allow conversion of Shipping Bills from one Export Promotion scheme to other scheme. Customs shall now permit this conversion within three months, instead of the present limited period of only one month.33

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INDIA’S FOREIGN TRADEPOLICY 2009-14Reduction in Transaction Costs:Dispatch of imported goods directly from the Port to the site has been allowed under Advance Authorization scheme for deemed supplies. (Presently the duty free imported goods could be taken only to the manufacturing unit of the authorization holder or its supporting manufacturer. Maximum applicable fee for 18 Authorizations/ license applications (except those mentioned in Chapter 3 of FTP) has been reduced to Rs. 100,000 from the existing Rs 1,50,000 (for manual applications) and Rs. 50,000 from the existing Rs.75,000 (for EDI applications). 34

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INDIA’S FOREIGN TRADEPOLICY 2009-14Disposal of Manufacturing Wastes:Disposal of manufacturing wastes / scrap will now be allowed after payment of applicable excise duty also before fulfillment of export obligation under Advance Authorization and EPCG Scheme. Earlier it was allowed after fulfillment of export obligation. Announcements for Sports Weapon:Licenses for the import of sports weapon will be issued now by Regional Authorities provided a NOC (No Objection Certificate) is issued by Ministry of Sports & Youth Affairs. 35

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INDIA’S FOREIGN TRADEPOLICY 2009-14Announcements for Medical DevicesTo solve the problem of medical device industry, the procedure for issue of Free Sale Certificate has been simplified and the validity of the Certificate has been increased from 1 year to 2 years. Announcements for Automobile IndustryThose Automobile industries which have their R&D establishment will be allowed free import of reference fuels (petrol and diesel), upto a maximum of 5 KL per annum, which are not manufactured in India. 36

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INDIA’S FOREIGN TRADEPOLICY 2009-14Announcements for EDI InitiativesExport Promotion Councils & Commodity Boards have been advised to issue RCMC through a web based online system. It is expected that issuance of RCMC would become EDI enabled before the end of 2009. Set up of Directorate of Trade Remedy Measures AnnouncedA Directorate of Trade Remedy Measures shall be set up, which will enable support to Indian industry and exporters, especially the Micro Small & medium Enterprises(MSMEs) in availing their rights through trade remedy instruments37

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INDIA’S FOREIGN TRADEPOLICY 2009-14Duty Credit Scrip's Earlier the payment of customs duty for Export Obligation (EO) shortfall under Advance Authorization , DFIA or EPCG Authorization was allowed in cash only. Now this payment can be done in the way of debit of Duty Credit scrip's. Import of Restricted Items Restricted Items can be imported now (as replenishment) against transferred DFIAs (Duty Free Import Authorizations) as the present DFRC (Duty Free Replenishment Card) scheme. 38

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THANK YOU39

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