Interim Exim Policy 2009 - 10 Highlights TRADE FACILITATION MEASURES
(SUPPLEMENT TO FOREIGN TRADE POLICY 2004-09) ANNOUNCED ON 26TH FEBRUARY, 2009
MINISTRY OF COMMERCE AND INDUSTRY DEPARTMENT OF COMMERCE GOVERNMENT OF INDIA
TRADE FACILITATION MEASURES.
FTP BENEFITS WITHOUT BRC
1. Duty credit scrip’s under Chapter 3 and under DEPB scheme shall now be issued without waiting for realization of export proceeds. The exporters shall be required to submit proof of export proceeds realization within the time limits prescribed by Reserve Bank of India. The issuance of these benefits without BRC would be subject to a Bank Guarantee/LUT in terms of Circular to be issued. This provision shall be applicable for applications made on or after 1.4.2009.
ADDITIONAL BENEFITS UNDER PROMOTIONAL SCHEMES
2. Rupees 325 Crores would be provided under Promotional Schemes for Leather, Textile etc. for exports made with effect from 1.4.09.
3. Benefit of 5% under FPS has been notified for export of Handmade carpets, in lieu of 3.5% benefit allowed earlier under VKGUY Scheme.
4. Technical textiles and stapling machine have been added under Focus Product Scheme. An additional benefit of 2.5% is notified for export of dried vegetables under VKGUY.
GEMS & JEWELLERY SECTOR
6.Import restrictions on worked corals have been removed to address the grievance of gem and jewellery exporters.
7.Authorised person of Gem & Jewellery units in EOU shall be allowed personal carriage of gold in primary form upto 10 kgs in a financial year subject to RBI and customs guidelines.
ADVANCE AUTHORISATION
8. Export obligation period against advance authorizations has been extended upto 36 months in view of the present global economic slowdown.
9. Supply of an Intermediate product by the domestic supplier directly from their factory to the Port against Advance Intermediate Authorisation, for export by ultimate exporter, has been allowed.
10. For Advance Licenses issued prior to 1.4.2002, the requirement of MODVAT/CENVAT certificate dispensed with in cases where the Customs Notification itself prescribed for payment of CVD. This will help in closure of a number of pending advance licences.
11. In case of Advance Authorisation for Annual Requirement where Standard Input-Output Norms are not fixed, the provisions in Customs Notification have been amended in line with Foreign Trade Policy.
DEPB SCHEME
12. At present, DEPB/Duty Credit Scrip can be used for payment of duty only on items which are under free category. The utilization is now extended for payment of duty for import of restricted items also.
13. Value cap applicable under DEPB have been revised upwards for products.
EPCG SCHEME
14. Under EPCG scheme, in case of decline in exports of a product(s) by more than 5%, the export obligation for all exporters of that product(s) is to be reduced proportionately. This provision has been extended for the year 2009-10, for exports during 2008-09.
15. EPCG Authorisation / Redemption Form i.e ANF 5A and 5B are being simplified and new forms would be issued shortly.
PREMIER TRADING HOUSES
16. At present, Govt. recognizes Premier Trading Houses based on an export turnover of Rs.10,000 crores in the previous three years and the current year taken together.In view of the prevailing global slowdown, the threshold limit for recognition as Premier Trading House has now been reduced to Rs.7500 crores.
TOWNS OF EXPORT EXCELLENCE
17. Bhilwara in Rajasthan and Surat in Gujarat have been recognized as Towns of Export Excellence, for textiles and diamonds respectively.
OTHER FACILITATION MEASURES
18. Re-imbursement of additional duty of excise levied on fuel under the Finance Acts would also be admissible in respect of EOUs.
19. Re-credit of 4% SAD, in case of payment of duty by incentive scheme scrips such as VKGUY, FPS and FMS, has now been allowed.
20.. A simplified provision has now been introduced and exporters can now submit a Central Excise certified statement in lieu of individual invoices and a Monthly Statement confirming duty payment in lieu of ER-1/ ER-3, for the purpose of Deemed Export Benefits.
21. Export of blood samples is now permitted without license after obtaining ‘no objection certificate’ from Director General of Health Services (DGHS).
22. Simplified export procedure for issue of Free Sale Certificate.
23. Independent office of DGFT being opened at Srinagar.
24. Krishnapatnam seaport included for the purpose of Export Promotion Scheme.
25. Electronic Message Transfer facility for Advance Authorisation and EPCG Scheme established for shipments from EDI ports w.e.f. 1.4.2009. Requirement of hard copy of Shipping Bills dispensed with for Export Obligation discharge.
26. In addition to the above, DGFT and Department of Revenue provisions have been aligned in following matters:
(i) Utilization of Duty Credit scrip allowed under Reward Schemes of Chapter 3 / DEPB in Chapter 4 of FTP for payment of duty under
EPCG Scheme .
(ii)Notification of DFIA scheme aligned with FTP provisions.
(iii)Granite Sector EOUs have been allowed procurement ofspares upto 5% value of quarrying equipment in each financial year.
(iv)High Tech Products duty credit scrip - Issuance of corresponding Customs Notification for implementing High Tech Products duty credit scrip.
(v)Re-import of exported pharmaceutical samples by EOUs without payment of duty for statutory requirement of Stability or Retention has been allowed and notified by DOR.
(vi)Department of Revenue shall issue necessary clarification implementing provisions of paragraph 6.9(e) of FTP related to EOUs, thereby allowing them to supply goods and services at Zero Duty to authorized organisations notified for Zero Duty import.
(vii)Customs Notification to allow import of Agricultural Capital Goods / Equipments by Status Holders (under para 3.8.6 of FTP) aligned with provisions of FTP.
ANNUAL SUPPLEMENT 2005 TO THE FOREIGN TRADE POLICY 2004-09
PREAMBLE (preface)
On August 31, 2004 the Government spelt out a bold vision to double India's share in world trade within five years, and to focus on the generation of additional employment in the process. The current trade figures indicate that India is not only on the right path but approaching the goal at an accelerated pace.
India to be a major gainer from emerging global trends
In the fast changing international trading scenario (situation), outsourcing of manufacturing activities in the skill intensive sectors has become an essential business strategy for the developed countries. Indian advantage goes well beyond the low wage rates. While there is no doubt that knowledge based industries such as information technology offer India a smooth route to world markets, great potential and opportunities exist in the manufacturing sector also.
FTP strategy is on the right track
The Foreign Trade Policy articulated two basic objectives that would enable India to achieve these goals.
a. The first objective was doubling our percentage share of global merchandise trade within five years. To achieve this, an average annual growth rate of about 16% was envisaged (to visualize).
FTP as a generator of Employment
The second objective of the FTP was providing thrust to employment generation particularly in semi-urban and rural areas. The FTP announced special focus initiatives in the employment intensive areas of agriculture, handicrafts, handlooms, gems & jewellery and leather & footwear sectors. The employment generation has been encouraging not only in these sectors, but in other sectors across the board.
In order to achieve our Foreign Trade Policy objective of becoming a major player in world trade, a comprehensive view needs to be taken for the overall development of the country's foreign trade.
REMOVAL OF EXPORT CESS
The Department of Commerce has taken a consistent stand from a policy perspective that taxes and duties should not be exported. The cess levied under the different Commodity Board Acts is a tax on exports, which is a handicap and a major irritant to our exporters and erodes the competitiveness of Indian agriculture exports. Department of Commerce proposes to abolish cess on export of all agricultural and plantation commodities levied under various Commodity Board Acts.
EXPORT PROMOTION CAPITAL GOODS SCHEME
a. For providing a thrust to the Agricultural sector, a longer period of time with a reduced export obligation i.e. 6 times the duty saved over a 12 year period instead of the normal window of 8 times the duty saved in 8 years.
b. To promote capacity expansion and quality up-gradation in the SSI sector, import of capital goods at 5% Customs duty shall now be allowed subject to a fulfillment of an export obligation equivalent to 6 times the duty saved on capital goods imported under the EPCG Scheme over a period of 8 years.
c. To create modern infrastructure in the retail sector, concessional duty benefits under EPCG scheme shall be extended for import of capital goods required by retailers having a minimum covered shopping area of 1000 sq metres. The retailer shall fulfill the export obligation under the Scheme from payments received against 'counter sales' in free foreign exchange through banking channels as per RBI guidelines.
d. With a view to accelerate exports under the Scheme and to incentives fast track companies, firms making 75 % or more of the exports under the EPCG Scheme (including average level of exports) in half or less than half the original export obligation period, shall be freed from the balance export obligation.
e. Payment received in Rupees for the Port Handling services are counted for export obligation discharge under the EPCG Scheme. This facility is now being extended to include minor ports including ICDs and Container Freight Stations (CFS) also.
f. The present requirement of submitting an Installation Certificate for machinery imported under EPCG Scheme will now not be required for units, which are not registered with Central Excise.
g. The facility of clubbing of EPCG licenses has been further liberalized. This will considerably reduce paperwork both for the exporter and the licensing authorities and lead to easier monitoring.
SERVICE EXPORTS
a. To enable the Service providers to upgrade the infrastructure in their associate companies, the goods imported under the 'Served from India' Scheme shall be transferable within the Group companies and managed hotels subject to Actual User condition.
b. At present, Hotels & Restaurants are required to submit a Chartered Accountant certificate that the entire duty benefits availed under the 'Served from India' Scheme have been passed on to the consumer. From now on, only a declaration will be submitted by the Hotels & Restaurants that the duty benefits shall be passed on to the consumer and no CA certificate will be required to be submitted.
AGRI EXPORTS
a. Benefits under 'Vishesh Krishi Upaj Yojana' shall also be extended to exports of poultry and dairy products in addition to export of flowers, fruits, vegetables, minor forest produce and their value added products.
b. Procedural guidelines for the Scheme have also been notified and the exporter has been given the flexibility to obtain duty credit certificates in split form that will make utilization of the licences easier.
.
GEM AND JEWELLERY EXPORTS
a. Entitlement for Duty Free imports of Gems and Jewellery samples have been enhanced to Rs. 3 lakhs in a financial year or 0.25% of the average of the last three years exports turnover or gems and jewellery items, whichever is lower. Earlier this limit was Rs. 1 lakh.
b. Supply of gold of 0.995 and above purity shall also be allowed for release by nominated agencies for export purposes. Earlier this facility was only available for supply of gold in the domestic market.
c. The notional rate for fixing the US $ rate for calculating gold jewellery exports shall now be based on a certificate which is not older than 7 working days from the date of shipping. The present provisions mandated that the notional rate certificate issued by the nominated agency should not be older than 3 working days.
d. Exporters of plain/studded/precious metal jewellery will be allowed to import plain/ studded/precious metal jewellery (Gold jewellery of 18 carat and below/platinum and sterling silver jewellery) for the purposes of exports.
PACKAGE FOR MARINE SECTOR
a. Duty free import of specified specialized inputs/chemicals and flavoring oils as per a defined list shall be allowed to the extent of 1% of FOB value of preceding financial years export. Use of these special ingredients for seafood processing will enable us to achieve a higher value addition and enter new export markets.
b. To encourage the existing mechanized vessels and deep sea trawlers to adopt modern technology for scientific exploitation of our marine resources in an eco-friendly manner and boost marine sector exports, it is proposed to allow import of monofilament long line system for tuna fishing at a concessional rate of duty.
c. The present system of disposal of waste of perishable commodities like seafood after inspection by a customs official is very cumbersome and leads to development of unhygienic conditions. To overcome this, a self removal procedure for clearance of waste shall be applicable, subject to prescribed wastage norms.
. ADVANCE LICENSING SCHEME
a. No safeguard and antidumping duty shall be levied on inputs under Advance License for deemed export supplies made to ICB projects. With this different categories of Advance licenses i.e. advance license for physical export, advance license for intermediate supplies and advance license for deemed exports have been merged into a single category for procedural facilitation and easier monitoring.
b. The scope of Advance License for Annual requirement has been extended to all categories of exporters having past export performance. Earlier, the option was limited to Status Holders only. The earlier limit of obtaining Advance License for Annual requirement has also been enhanced to 300% of FOB/FOR value of exports made in the previous year from 200%.
c. Clubbing of advance licenses for export regularization purpose has been allowed even for licenses pertaining to 1992-97 period.
d. Units registered under BIFR shall be allowed export obligation extension as per the rehabilitation package or a period up to five years reckoned from the date of issuance of the advance license, whichever is higher.
e. Transfer of Duty Free material imported or procured under Advance License from one unit of the company to another unit of the same company to be allowed with prior intimation to the jurisdictional central excise authority. Earlier prior permission of the jurisdictional central excise authority was required.
f. In cases the Bank Guarantee/LUT has been redeemed under the Advance license, the Licensee may be allowed to get duty free inputs processed from any manufacturer under actual user condition subject to central excise procedures relating to job work.
g. Removal of requirement of ARO for taking supplies from EOU/EHTP/STP/BTP units and allowing direct debit of the advance license by the Bond Officer of these units. A detailed procedure in this regard shall be prescribed by the CBEC.
DUTY FREE REPLENISHMENT CERTIFICATE
a. List of Sensitive Items has been pruned down to nine items. Brass scrap, Additives, Paper/Paper Board and Dye Stuffs shall be removed from the Sensitive List of items prescribed for import of items under DFRC.
b. Provision for re-credit on account of rejections of items imported under DFRC shall be similar to the facility available to DEPB and Advance License. While allowing re-credit, 95% of the value of the DFRC shall be credited.
DEPB
DEPB benefits shall be available for supply of goods from DTA to SEZs for the period 1.04.2003 to 11.05.2004.
EXPORT ORIENTED UNITS
a. Duty free spares up to 5% of the value of Capital Goods imported for excavation purposes in the Granite sector will be allowed to be removed to the quarries.
b. The de-bonding procedure for EOUs has been simplified. A self-assessment procedure along with time bound disposal of applications of such exiting EOUs will be put in place.
c. Capital Goods will be allowed to be transferred or given on loan basis to other units under intimation to both Excise and Development Commissioner.
d. Transfer of samples to other EOUs on returnable basis within a period of 30 days to be allowed.
e. EOUs to be permitted to claim IT exemption in respect of income on export proceeds realised within a period of 12 months from date of export.
TARGET PLUS SCHEME
a. The Target Plus Scheme aimed at rewarding incremental exports would continue in the year 2005-06 with such modifications as will be notified, separately for preventing misuse, if any.
BANK GUARANTEE
Quantum of Bank Guarantee in respect of "Other Manufacturer Exporters" category is being reduced from 25% to 15%. Units in Agri Export Zones (AEZs) shall also be eligible to submit a Bank Guarantee of 15%. In addition, only a 15% Bank Guarantee shall be required for 'established service providers' who have free foreign exchange earnings of Rs.50 lakhs or more during the preceding financial year and have a clean track record.
PROCEDURAL SIMPLIFICATION & REDUCTION OF TRANSACTION COSTS
Importers and exporters have to fill multiple application forms at various stages of their business activity to meet the procedural requirements of different Departments/Ministries under different Acts. It is our endeavor to simplify procedures and reduce the documentation requirements so as to reduce the transaction costs of the exporters and thereby increase their competitiveness in the international markets.
With this in mind, a Committee to look into procedural simplification and reduction of transaction costs was set up under the Chairmanship of Director General of Foreign Trade. The Committee has submitted its report and
some of the key recommendations made are:
a. Internal process re-engineering to enable greater delegation and simplification of forms and documents;
b. EDI linkage of all community trade partners like DGFT, Customs, Banks, Export Promotion Councils etc to facilitate web based filing, retrieval and verification of documents;
c. A fast track mechanism for clearances, examination, testing, quarantine, packaging etc. to be set up by all agencies to facilitate import/export of perishable cargo;
d. Laying down time limits for giving approvals/sanctions for different import and export activities by different agencies to ensure a transparent system of working in Government Departments and ensure continuous improvement in quality of services rendered.
As a first step towards this exercise, the DGFT has devised a single common application form called 'Aayaat Niryaat' Form. This 50 page set of forms, as against the 120 page set currently in existence, provides availability of information on DGFT related documentation at a single place and has a web interface for on-line filing by the exporter and retrieval of documents by the licensing authorities.
EDI INITIATIVES
a. DGFT shall strive to move towards an automated electronic environment for filing, retrieval and authentication of documents based on agreed protocols and message exchange with other community trade partners including Customs and Banks. Increased use of information technology for interacting with the trade through video conferencing, doing away with manual filing of documents by using digital signature and introducing a Special Purpose Vehicle for electronic license utilization and transfer mechanism is also envisaged. In addition, online web based information shall be made available for all Export and Import related policies and procedures on the DGFT website to enable the international trading community to access information from a single source.
b. A time frame of six months for complete EDI linkage between Customs and DGFT has been specified. After completion of this project the manual submission of shipping bills and related documents will be done away with and verification of licences shall be done online which shall considerably reduce transaction costs.
c. Facility of issuing Importer Exporter Code number (IEC) online is also being provided by linking the DGFT database with the Income Tax PAN database and use of digital signature technology. To add transparency in the system, other e-governance initiatives are also being planned to provide delivery of services to the user community without any human interface with the DGFT offices.
TRADE FACILITATION
a. To enable the users to make commercial decisions in a more professional manner, DGCI&S trade data shall be made available with minimum time lag in a query based structured format on commercial criteria.
b. All DGFT offices shall continue to provide facilitation to exporters in regard to developments in international trade i.e. WTO agreements, Rules of Origin and SPS requirements, anti dumping issues etc. to help the exporters strategise their import and export decisions in an internationally dynamic environment.
c. To promote export of 'Minor Forest Produce' products Shellac Export Promotion Council has been designated as a nodal EPC for minor forest produce.
d. All EPCs shall open a separate Cell to involve and encourage youth and women entrepreneurs in the export effort.
e. Handloom - Government has decided to develop a trademark for Handloom on lines similar to 'Woolmark' and 'Silkmark'. This will enable handloom products to develop a niche market with a distinct identity.
f. Tea - In order to maintain quality and retain the brand equity of Indian teas, the Government has issued a new Tea (Distribution and Export) Control Order, 2005 which prescribes strict norms for tea. All teas, whether imported or exported would be required to conform to the specifications cited in the new Order.
Tea has been classified for the purpose of issue of non-preferential Certificate of Origin into three categories:
i. Tea wholly produced or obtained in India will only be classified as "India tea."
ii. Where the Indian tea content in the export is not less than 90% by weight, it will be classified as "India tea (not less than 90% by weight of tea)".
iii. In case of tea not wholly produced or obtained in India and where the content of Indian tea is less than 90% by weight, it will be classified as "Blended tea of different origin and packed in India".
The new Order also prescribes a minimum value addition norm of 50% on export of all imported tea and stipulates a time period of 6 months from the date of import for the export of imported tea.
(SUPPLEMENT TO FOREIGN TRADE POLICY 2004-09) ANNOUNCED ON 26TH FEBRUARY, 2009
MINISTRY OF COMMERCE AND INDUSTRY DEPARTMENT OF COMMERCE GOVERNMENT OF INDIA
TRADE FACILITATION MEASURES.
FTP BENEFITS WITHOUT BRC
1. Duty credit scrip’s under Chapter 3 and under DEPB scheme shall now be issued without waiting for realization of export proceeds. The exporters shall be required to submit proof of export proceeds realization within the time limits prescribed by Reserve Bank of India. The issuance of these benefits without BRC would be subject to a Bank Guarantee/LUT in terms of Circular to be issued. This provision shall be applicable for applications made on or after 1.4.2009.
ADDITIONAL BENEFITS UNDER PROMOTIONAL SCHEMES
2. Rupees 325 Crores would be provided under Promotional Schemes for Leather, Textile etc. for exports made with effect from 1.4.09.
3. Benefit of 5% under FPS has been notified for export of Handmade carpets, in lieu of 3.5% benefit allowed earlier under VKGUY Scheme.
4. Technical textiles and stapling machine have been added under Focus Product Scheme. An additional benefit of 2.5% is notified for export of dried vegetables under VKGUY.
GEMS & JEWELLERY SECTOR
6.Import restrictions on worked corals have been removed to address the grievance of gem and jewellery exporters.
7.Authorised person of Gem & Jewellery units in EOU shall be allowed personal carriage of gold in primary form upto 10 kgs in a financial year subject to RBI and customs guidelines.
ADVANCE AUTHORISATION
8. Export obligation period against advance authorizations has been extended upto 36 months in view of the present global economic slowdown.
9. Supply of an Intermediate product by the domestic supplier directly from their factory to the Port against Advance Intermediate Authorisation, for export by ultimate exporter, has been allowed.
10. For Advance Licenses issued prior to 1.4.2002, the requirement of MODVAT/CENVAT certificate dispensed with in cases where the Customs Notification itself prescribed for payment of CVD. This will help in closure of a number of pending advance licences.
11. In case of Advance Authorisation for Annual Requirement where Standard Input-Output Norms are not fixed, the provisions in Customs Notification have been amended in line with Foreign Trade Policy.
DEPB SCHEME
12. At present, DEPB/Duty Credit Scrip can be used for payment of duty only on items which are under free category. The utilization is now extended for payment of duty for import of restricted items also.
13. Value cap applicable under DEPB have been revised upwards for products.
EPCG SCHEME
14. Under EPCG scheme, in case of decline in exports of a product(s) by more than 5%, the export obligation for all exporters of that product(s) is to be reduced proportionately. This provision has been extended for the year 2009-10, for exports during 2008-09.
15. EPCG Authorisation / Redemption Form i.e ANF 5A and 5B are being simplified and new forms would be issued shortly.
PREMIER TRADING HOUSES
16. At present, Govt. recognizes Premier Trading Houses based on an export turnover of Rs.10,000 crores in the previous three years and the current year taken together.In view of the prevailing global slowdown, the threshold limit for recognition as Premier Trading House has now been reduced to Rs.7500 crores.
TOWNS OF EXPORT EXCELLENCE
17. Bhilwara in Rajasthan and Surat in Gujarat have been recognized as Towns of Export Excellence, for textiles and diamonds respectively.
OTHER FACILITATION MEASURES
18. Re-imbursement of additional duty of excise levied on fuel under the Finance Acts would also be admissible in respect of EOUs.
19. Re-credit of 4% SAD, in case of payment of duty by incentive scheme scrips such as VKGUY, FPS and FMS, has now been allowed.
20.. A simplified provision has now been introduced and exporters can now submit a Central Excise certified statement in lieu of individual invoices and a Monthly Statement confirming duty payment in lieu of ER-1/ ER-3, for the purpose of Deemed Export Benefits.
21. Export of blood samples is now permitted without license after obtaining ‘no objection certificate’ from Director General of Health Services (DGHS).
22. Simplified export procedure for issue of Free Sale Certificate.
23. Independent office of DGFT being opened at Srinagar.
24. Krishnapatnam seaport included for the purpose of Export Promotion Scheme.
25. Electronic Message Transfer facility for Advance Authorisation and EPCG Scheme established for shipments from EDI ports w.e.f. 1.4.2009. Requirement of hard copy of Shipping Bills dispensed with for Export Obligation discharge.
26. In addition to the above, DGFT and Department of Revenue provisions have been aligned in following matters:
(i) Utilization of Duty Credit scrip allowed under Reward Schemes of Chapter 3 / DEPB in Chapter 4 of FTP for payment of duty under
EPCG Scheme .
(ii)Notification of DFIA scheme aligned with FTP provisions.
(iii)Granite Sector EOUs have been allowed procurement ofspares upto 5% value of quarrying equipment in each financial year.
(iv)High Tech Products duty credit scrip - Issuance of corresponding Customs Notification for implementing High Tech Products duty credit scrip.
(v)Re-import of exported pharmaceutical samples by EOUs without payment of duty for statutory requirement of Stability or Retention has been allowed and notified by DOR.
(vi)Department of Revenue shall issue necessary clarification implementing provisions of paragraph 6.9(e) of FTP related to EOUs, thereby allowing them to supply goods and services at Zero Duty to authorized organisations notified for Zero Duty import.
(vii)Customs Notification to allow import of Agricultural Capital Goods / Equipments by Status Holders (under para 3.8.6 of FTP) aligned with provisions of FTP.
ANNUAL SUPPLEMENT 2005 TO THE FOREIGN TRADE POLICY 2004-09
PREAMBLE (preface)
On August 31, 2004 the Government spelt out a bold vision to double India's share in world trade within five years, and to focus on the generation of additional employment in the process. The current trade figures indicate that India is not only on the right path but approaching the goal at an accelerated pace.
India to be a major gainer from emerging global trends
In the fast changing international trading scenario (situation), outsourcing of manufacturing activities in the skill intensive sectors has become an essential business strategy for the developed countries. Indian advantage goes well beyond the low wage rates. While there is no doubt that knowledge based industries such as information technology offer India a smooth route to world markets, great potential and opportunities exist in the manufacturing sector also.
FTP strategy is on the right track
The Foreign Trade Policy articulated two basic objectives that would enable India to achieve these goals.
a. The first objective was doubling our percentage share of global merchandise trade within five years. To achieve this, an average annual growth rate of about 16% was envisaged (to visualize).
FTP as a generator of Employment
The second objective of the FTP was providing thrust to employment generation particularly in semi-urban and rural areas. The FTP announced special focus initiatives in the employment intensive areas of agriculture, handicrafts, handlooms, gems & jewellery and leather & footwear sectors. The employment generation has been encouraging not only in these sectors, but in other sectors across the board.
In order to achieve our Foreign Trade Policy objective of becoming a major player in world trade, a comprehensive view needs to be taken for the overall development of the country's foreign trade.
REMOVAL OF EXPORT CESS
The Department of Commerce has taken a consistent stand from a policy perspective that taxes and duties should not be exported. The cess levied under the different Commodity Board Acts is a tax on exports, which is a handicap and a major irritant to our exporters and erodes the competitiveness of Indian agriculture exports. Department of Commerce proposes to abolish cess on export of all agricultural and plantation commodities levied under various Commodity Board Acts.
EXPORT PROMOTION CAPITAL GOODS SCHEME
a. For providing a thrust to the Agricultural sector, a longer period of time with a reduced export obligation i.e. 6 times the duty saved over a 12 year period instead of the normal window of 8 times the duty saved in 8 years.
b. To promote capacity expansion and quality up-gradation in the SSI sector, import of capital goods at 5% Customs duty shall now be allowed subject to a fulfillment of an export obligation equivalent to 6 times the duty saved on capital goods imported under the EPCG Scheme over a period of 8 years.
c. To create modern infrastructure in the retail sector, concessional duty benefits under EPCG scheme shall be extended for import of capital goods required by retailers having a minimum covered shopping area of 1000 sq metres. The retailer shall fulfill the export obligation under the Scheme from payments received against 'counter sales' in free foreign exchange through banking channels as per RBI guidelines.
d. With a view to accelerate exports under the Scheme and to incentives fast track companies, firms making 75 % or more of the exports under the EPCG Scheme (including average level of exports) in half or less than half the original export obligation period, shall be freed from the balance export obligation.
e. Payment received in Rupees for the Port Handling services are counted for export obligation discharge under the EPCG Scheme. This facility is now being extended to include minor ports including ICDs and Container Freight Stations (CFS) also.
f. The present requirement of submitting an Installation Certificate for machinery imported under EPCG Scheme will now not be required for units, which are not registered with Central Excise.
g. The facility of clubbing of EPCG licenses has been further liberalized. This will considerably reduce paperwork both for the exporter and the licensing authorities and lead to easier monitoring.
SERVICE EXPORTS
a. To enable the Service providers to upgrade the infrastructure in their associate companies, the goods imported under the 'Served from India' Scheme shall be transferable within the Group companies and managed hotels subject to Actual User condition.
b. At present, Hotels & Restaurants are required to submit a Chartered Accountant certificate that the entire duty benefits availed under the 'Served from India' Scheme have been passed on to the consumer. From now on, only a declaration will be submitted by the Hotels & Restaurants that the duty benefits shall be passed on to the consumer and no CA certificate will be required to be submitted.
AGRI EXPORTS
a. Benefits under 'Vishesh Krishi Upaj Yojana' shall also be extended to exports of poultry and dairy products in addition to export of flowers, fruits, vegetables, minor forest produce and their value added products.
b. Procedural guidelines for the Scheme have also been notified and the exporter has been given the flexibility to obtain duty credit certificates in split form that will make utilization of the licences easier.
.
GEM AND JEWELLERY EXPORTS
a. Entitlement for Duty Free imports of Gems and Jewellery samples have been enhanced to Rs. 3 lakhs in a financial year or 0.25% of the average of the last three years exports turnover or gems and jewellery items, whichever is lower. Earlier this limit was Rs. 1 lakh.
b. Supply of gold of 0.995 and above purity shall also be allowed for release by nominated agencies for export purposes. Earlier this facility was only available for supply of gold in the domestic market.
c. The notional rate for fixing the US $ rate for calculating gold jewellery exports shall now be based on a certificate which is not older than 7 working days from the date of shipping. The present provisions mandated that the notional rate certificate issued by the nominated agency should not be older than 3 working days.
d. Exporters of plain/studded/precious metal jewellery will be allowed to import plain/ studded/precious metal jewellery (Gold jewellery of 18 carat and below/platinum and sterling silver jewellery) for the purposes of exports.
PACKAGE FOR MARINE SECTOR
a. Duty free import of specified specialized inputs/chemicals and flavoring oils as per a defined list shall be allowed to the extent of 1% of FOB value of preceding financial years export. Use of these special ingredients for seafood processing will enable us to achieve a higher value addition and enter new export markets.
b. To encourage the existing mechanized vessels and deep sea trawlers to adopt modern technology for scientific exploitation of our marine resources in an eco-friendly manner and boost marine sector exports, it is proposed to allow import of monofilament long line system for tuna fishing at a concessional rate of duty.
c. The present system of disposal of waste of perishable commodities like seafood after inspection by a customs official is very cumbersome and leads to development of unhygienic conditions. To overcome this, a self removal procedure for clearance of waste shall be applicable, subject to prescribed wastage norms.
. ADVANCE LICENSING SCHEME
a. No safeguard and antidumping duty shall be levied on inputs under Advance License for deemed export supplies made to ICB projects. With this different categories of Advance licenses i.e. advance license for physical export, advance license for intermediate supplies and advance license for deemed exports have been merged into a single category for procedural facilitation and easier monitoring.
b. The scope of Advance License for Annual requirement has been extended to all categories of exporters having past export performance. Earlier, the option was limited to Status Holders only. The earlier limit of obtaining Advance License for Annual requirement has also been enhanced to 300% of FOB/FOR value of exports made in the previous year from 200%.
c. Clubbing of advance licenses for export regularization purpose has been allowed even for licenses pertaining to 1992-97 period.
d. Units registered under BIFR shall be allowed export obligation extension as per the rehabilitation package or a period up to five years reckoned from the date of issuance of the advance license, whichever is higher.
e. Transfer of Duty Free material imported or procured under Advance License from one unit of the company to another unit of the same company to be allowed with prior intimation to the jurisdictional central excise authority. Earlier prior permission of the jurisdictional central excise authority was required.
f. In cases the Bank Guarantee/LUT has been redeemed under the Advance license, the Licensee may be allowed to get duty free inputs processed from any manufacturer under actual user condition subject to central excise procedures relating to job work.
g. Removal of requirement of ARO for taking supplies from EOU/EHTP/STP/BTP units and allowing direct debit of the advance license by the Bond Officer of these units. A detailed procedure in this regard shall be prescribed by the CBEC.
DUTY FREE REPLENISHMENT CERTIFICATE
a. List of Sensitive Items has been pruned down to nine items. Brass scrap, Additives, Paper/Paper Board and Dye Stuffs shall be removed from the Sensitive List of items prescribed for import of items under DFRC.
b. Provision for re-credit on account of rejections of items imported under DFRC shall be similar to the facility available to DEPB and Advance License. While allowing re-credit, 95% of the value of the DFRC shall be credited.
DEPB
DEPB benefits shall be available for supply of goods from DTA to SEZs for the period 1.04.2003 to 11.05.2004.
EXPORT ORIENTED UNITS
a. Duty free spares up to 5% of the value of Capital Goods imported for excavation purposes in the Granite sector will be allowed to be removed to the quarries.
b. The de-bonding procedure for EOUs has been simplified. A self-assessment procedure along with time bound disposal of applications of such exiting EOUs will be put in place.
c. Capital Goods will be allowed to be transferred or given on loan basis to other units under intimation to both Excise and Development Commissioner.
d. Transfer of samples to other EOUs on returnable basis within a period of 30 days to be allowed.
e. EOUs to be permitted to claim IT exemption in respect of income on export proceeds realised within a period of 12 months from date of export.
TARGET PLUS SCHEME
a. The Target Plus Scheme aimed at rewarding incremental exports would continue in the year 2005-06 with such modifications as will be notified, separately for preventing misuse, if any.
BANK GUARANTEE
Quantum of Bank Guarantee in respect of "Other Manufacturer Exporters" category is being reduced from 25% to 15%. Units in Agri Export Zones (AEZs) shall also be eligible to submit a Bank Guarantee of 15%. In addition, only a 15% Bank Guarantee shall be required for 'established service providers' who have free foreign exchange earnings of Rs.50 lakhs or more during the preceding financial year and have a clean track record.
PROCEDURAL SIMPLIFICATION & REDUCTION OF TRANSACTION COSTS
Importers and exporters have to fill multiple application forms at various stages of their business activity to meet the procedural requirements of different Departments/Ministries under different Acts. It is our endeavor to simplify procedures and reduce the documentation requirements so as to reduce the transaction costs of the exporters and thereby increase their competitiveness in the international markets.
With this in mind, a Committee to look into procedural simplification and reduction of transaction costs was set up under the Chairmanship of Director General of Foreign Trade. The Committee has submitted its report and
some of the key recommendations made are:
a. Internal process re-engineering to enable greater delegation and simplification of forms and documents;
b. EDI linkage of all community trade partners like DGFT, Customs, Banks, Export Promotion Councils etc to facilitate web based filing, retrieval and verification of documents;
c. A fast track mechanism for clearances, examination, testing, quarantine, packaging etc. to be set up by all agencies to facilitate import/export of perishable cargo;
d. Laying down time limits for giving approvals/sanctions for different import and export activities by different agencies to ensure a transparent system of working in Government Departments and ensure continuous improvement in quality of services rendered.
As a first step towards this exercise, the DGFT has devised a single common application form called 'Aayaat Niryaat' Form. This 50 page set of forms, as against the 120 page set currently in existence, provides availability of information on DGFT related documentation at a single place and has a web interface for on-line filing by the exporter and retrieval of documents by the licensing authorities.
EDI INITIATIVES
a. DGFT shall strive to move towards an automated electronic environment for filing, retrieval and authentication of documents based on agreed protocols and message exchange with other community trade partners including Customs and Banks. Increased use of information technology for interacting with the trade through video conferencing, doing away with manual filing of documents by using digital signature and introducing a Special Purpose Vehicle for electronic license utilization and transfer mechanism is also envisaged. In addition, online web based information shall be made available for all Export and Import related policies and procedures on the DGFT website to enable the international trading community to access information from a single source.
b. A time frame of six months for complete EDI linkage between Customs and DGFT has been specified. After completion of this project the manual submission of shipping bills and related documents will be done away with and verification of licences shall be done online which shall considerably reduce transaction costs.
c. Facility of issuing Importer Exporter Code number (IEC) online is also being provided by linking the DGFT database with the Income Tax PAN database and use of digital signature technology. To add transparency in the system, other e-governance initiatives are also being planned to provide delivery of services to the user community without any human interface with the DGFT offices.
TRADE FACILITATION
a. To enable the users to make commercial decisions in a more professional manner, DGCI&S trade data shall be made available with minimum time lag in a query based structured format on commercial criteria.
b. All DGFT offices shall continue to provide facilitation to exporters in regard to developments in international trade i.e. WTO agreements, Rules of Origin and SPS requirements, anti dumping issues etc. to help the exporters strategise their import and export decisions in an internationally dynamic environment.
c. To promote export of 'Minor Forest Produce' products Shellac Export Promotion Council has been designated as a nodal EPC for minor forest produce.
d. All EPCs shall open a separate Cell to involve and encourage youth and women entrepreneurs in the export effort.
e. Handloom - Government has decided to develop a trademark for Handloom on lines similar to 'Woolmark' and 'Silkmark'. This will enable handloom products to develop a niche market with a distinct identity.
f. Tea - In order to maintain quality and retain the brand equity of Indian teas, the Government has issued a new Tea (Distribution and Export) Control Order, 2005 which prescribes strict norms for tea. All teas, whether imported or exported would be required to conform to the specifications cited in the new Order.
Tea has been classified for the purpose of issue of non-preferential Certificate of Origin into three categories:
i. Tea wholly produced or obtained in India will only be classified as "India tea."
ii. Where the Indian tea content in the export is not less than 90% by weight, it will be classified as "India tea (not less than 90% by weight of tea)".
iii. In case of tea not wholly produced or obtained in India and where the content of Indian tea is less than 90% by weight, it will be classified as "Blended tea of different origin and packed in India".
The new Order also prescribes a minimum value addition norm of 50% on export of all imported tea and stipulates a time period of 6 months from the date of import for the export of imported tea.
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